Firms Typically Raise Long-Term Funds

question 22

Multiple Choice

Firms typically raise long-term funds

• A) on a continuous basis.
• B) in proportion to the capital mixture of the target capital structure.
• C) in lump sums as needed.
• D) only at the inception of the firm.

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Definitions:

Break-Even Point

The point at which total costs equal total revenue, meaning there is no net loss or gain.

Variable Costs

Costs that vary in proportion with the level of goods or services produced or sold.

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance premiums.

Break-Even Point

The sales level at which total revenues equal total costs, resulting in no profit but no loss.