Which of the Following Would Increase the Likelihood That a Company

question 54

Multiple Choice

Which of the following would increase the likelihood that a company would increase its debt ratio, other things held constant?

• A)An increase in costs incurred when filing for bankruptcy.
• B)An increase in the corporate tax rate.
• C)An increase in the personal tax rate.
• D)The Federal Reserve tightens interest rates in an effort to fight inflation.
• E)The company's stock price hits a new low.

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Definitions:

Tender Offers

A proposal by an entity or individual to purchase shares from the shareholders of a company at a specific price for a certain period.

Section 16(a)

A provision often found in legal documents that specifies particular regulations or requirements, the exact meaning depends on the context of the document.

Statutory Insiders

Individuals or entities, such as directors, officers, or major shareholders, who have access to a company's internal information, making them subject to specific legal requirements and restrictions.

1934 Act

Refers to the Securities Exchange Act of 1934, a U.S. federal law that governs the trading of securities in the secondary market, establishes the Securities and Exchange Commission, and lays down rules for exchanges and broker-dealers.