What Will Shareholders Do If They See a Firm Taking

question 5

Multiple Choice

What will shareholders do if they see a firm taking on increasing debt levels?

• A) Demand longer repayment periods
• B) Demand higher levels of return
• C) Demand lower levels of return
• D) Demand higher levels of gearing

---

Definitions:

Due

Referring to an obligation or payment that is expected to be paid or fulfilled by a certain date.

Paid

The status of a financial obligation that has been fulfilled, indicating that no debt remains.

Year

A period of time consisting of 365 days, or 366 in a leap year, used as a basic unit of time to measure durations and align calendars.

Accumulated Depreciation

Accumulated depreciation accounts for the total amount of depreciation expense that has been claimed over the life of an asset, reducing its book value.