Which of the Following Statements Is CORRECT,holding Other Things Constant

question 88

Multiple Choice

Which of the following statements is CORRECT,holding other things constant?

• A) Firms whose assets are relatively liquid tend to have relatively low bankruptcy costs,hence they tend to use relatively little debt.
• B) An increase in the personal tax rate is likely to increase the debt ratio of the average corporation.
• C) If changes in the bankruptcy code make bankruptcy less costly to corporations,then this would likely lead to lower debt ratios for corporations.
• D) An increase in the company's degree of operating leverage would tend to encourage the firm to use more debt in its capital structure so as to keep its total risk unchanged.
• E) An increase in the corporate tax rate would in theory encourage companies to use more debt in their capital structures.

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Definitions:

Adrenal Medulla

A portion of the adrenal gland responsible for producing adrenaline and noradrenaline, which are vital for the body's fight or flight response.

Adenohypophysis

Portion of the hypophysis derived from the oral ectoderm; also called anterior pituitary.

Parathyroid Glands

The parathyroid glands are small endocrine glands in the neck that produce parathyroid hormone, which regulates calcium levels in the blood.

Somitomeres

Early segmented structures in embryonic development that give rise to somites, precursors to skeletal muscle, vertebrae, and dermis.