If a Firm Finances with Only Debt and Common Equity

question 58

True/False

If a firm finances with only debt and common equity, and if its equity multiplier is 3.0, then its debt ratio must be 0.667.

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Definitions:

Legal Objective

A principle that requires contracts to have a purpose that is lawful and not against public policy in order to be enforceable.

Breach

The violation or breaking of a law, duty, or contractual obligation either by commission or omission.

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale, leading to an increased interconnectedness of the world's economies, cultures, and populations.

UCC

The Uniform Commercial Code represents a detailed collection of regulations that manage every commercial transaction across the United States, aiming to standardize the legislation related to sales and various commercial activities.