In the Context of the Capital Structure of a Firm

question 50

Multiple Choice

In the context of the capital structure of a firm, which of the following statements is true of equity financing?

• A) It is less flexible than debt financing.
• B) It is less risky than debt financing.
• C) It requires firms to agree to burdensome covenants.
• D) It yields the same tax benefits as debt financing.

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Definitions:

Permanent Spanish Colony

A territory in the Americas, Africa, Asia, or Oceania that was settled and governed by Spain as a part of its empire indefinitely or until independence.

St. Augustine, Florida

A city in Northeast Florida and one of the oldest continuously inhabited European-established settlements in the continental United States, founded in 1565 by Spanish explorers.

Jamestown, Virginia

The first permanent English settlement in North America, founded in 1607, serving as the capital of the Colony of Virginia for several decades.

New France

New France was the area colonized by France in North America from the 16th to the 18th century, encompassing parts of what are now Canada, the United States, and the Caribbean.