If an Individual Wants to Borrow with Limited Liability, He/she

question 48

Multiple Choice

If an individual wants to borrow with limited liability, he/she should

• A)invest in the equity of an unlevered firm.
• B)borrow on his/her own account.
• C)invest in the equity of a levered firm.
• D)invest in a risk-free asset like T-bills.

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Definitions:

Canadian Investors

Canadian investors refer to individuals or entities based in Canada that allocate capital in various financial vehicles such as stocks, bonds, and real estate, aiming for future financial returns.

Repatriated

Refers to the process of converting foreign currency into the currency of one's home country or returning assets from overseas to the home country.

Before-Tax Profit

The earnings of a company before income tax expense is deducted, indicating the gross profitability from operations and other activities.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, and loan payments.