Other Things Held Constant,which of the Following Events Would Be

question 17

Multiple Choice

Other things held constant,which of the following events would be most likely to encourage a firm to increase the amount of debt in its capital structure?

• A) Its sales are projected to become less stable in the future.
• B) The bankruptcy laws are changed in a way that would make bankruptcy more costly to the firm and its stockholders.
• C) Management believes that the firm's stock is currently overvalued.
• D) The firm decides to automate its factory with specialized equipment and thus increase its use of operating leverage.
• E) The corporate tax rate is increased.

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Definitions:

Premises

Statements or propositions that provide the grounds or reasons for a conclusion in logical reasoning or arguments.

Existential Import

A term in traditional logic referring to the implication that a statement assumes the existence of the subject it mentions.

Syllogism

A form of deductive reasoning that consists of two premises followed by a conclusion, based on the relationship between the terms within the premises.

Shading

A technique used in drawing and painting to represent light and shadow, or the gradual change of value.