The Debt/equity Ratio Will Increase If a Company

question 37

Multiple Choice

The debt/equity ratio will increase if a company

• A)pays off its long-term debt.
• B)decides to pay cash for more of its capital purchases.
• C)purchases long-term investments for cash.
• D)declares more current cash dividends.

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Definitions:

Sample Variances

The measure of dispersion of data points in a sample around their sample mean, serving as an estimate of the population variance.

Test Statistic

A value calculated from sample data during a hypothesis test. Used to determine whether to reject the null hypothesis.

Alpha Level

The threshold of probability set for rejecting the null hypothesis; a measure of the likelihood of a Type I error.

Significance Level

The likelihood of incorrectly dismissing the null hypothesis as false, commonly represented by alpha.