When a Firm Initially Acquires Debt to Help Finance Its

question 131

Multiple Choice

When a firm initially acquires debt to help finance its operations, it is said that the firm is:

• A) Increasing its liquidity.
• B) Increasing its marketability.
• C) Increasing its operating cash flows.
• D) Spending its cash flow from assets.
• E) Employing financial leverage.

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Definitions:

Inflation

The rate of acceleration in the average pricing of goods and services, thereby diminishing the power of purchase.

Unemployment

The condition where people who have the ability to work and are actively looking for jobs cannot secure employment.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances in bank accounts.

Economic Pie

A metaphor for the total amount of wealth or resources available in an economy that can be distributed among its participants.