Which One of the Following Events Increases the Debt/equity Ratio

question 52

Multiple Choice

Which one of the following events increases the debt/equity ratio?

• A)Purchase of treasury stock
• B)Sale of treasury stock for more than its cost
• C)Sale of treasury stock for less than its cost
• D)Payment of cash dividends that were previously declared

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Definitions:

Regret Aversion

A theory in behavioral economics that describes the emotional reaction people experience after realizing they have made an error in judgment, leading them to avoid making decisions.

Money Illusion

Money illusion is a cognitive bias where people misjudge the value of money in terms of its purchasing power, typically neglecting the effects of inflation or deflation.

Representativeness Heuristic

A cognitive bias in decision-making where the likelihood of an event is estimated based on how similar it is to the typical case.

Narrow Framing

Making decisions without considering all implications or by overly focusing on a narrow set of factors.