Which One of the Following Statements Is TRUE

question 17

Multiple Choice

Which one of the following statements is TRUE?

• A) When an owner/manager sells stock to an outsider, that outsider now bears some of the costs of the owner/manager's perquisite consumption.
• B) Lenders can't legally prevent a firm from engaging in asset switching.
• C) Firms borrowing money have greater flexibility to use that money when there are debt covenants.
• D) When lenders protect themselves from the risk of asset switching, the firm's WACC can decrease.
• E) A lender calling in a corporate loan and then lending the funds out to a safer borrower is an example of asset switching.

---

Definitions:

Picture Content Control

A feature in document creation software that allows users to insert and manage images within a document.

Picture Shape Fill

A feature in graphic design and presentation software that lets users fill a shape with a specific picture, often used for creative effect.

Outlook Contacts

A component of Microsoft Outlook, a personal information manager, used to store and manage contact information such as email addresses, phone numbers, and postal addresses.

Mail Merge Recipients

Individuals or contacts selected to receive personalized documents or emails generated through a mail merge process.