Your Firm Uses Both Preferred and Common Stock as Well

question 75

Multiple Choice

Your firm uses both preferred and common stock as well as long-term debt to finance its operations.Which one of the following will increase the capital structure weight of the debt,all else equal?

• A) an increase in the market price of the common stock
• B) an increase in the number of shares of preferred stock outstanding
• C) an increase in the quoted price of the firm's bonds as a percentage of face value
• D) the exercise of warrants by company employees
• E) the conversion of convertible bonds into equity shares

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Definitions:

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The accuracy of a measurement, calculation, or specification in relation to the true value or an agreed-upon standard.

Mass

A measure of the amount of matter in an object, usually measured in grams or kilograms.

Density

The mass of a substance per unit volume, a measure of how much mass is contained in a given volume.

Volume

A measure of the capacity of a body or space, expressed in cubic units.