If an Individual Wanted to Borrow with Limited Liability He/she

question 61

Multiple Choice

If an individual wanted to borrow with limited liability he/she should:

• A) Invest in the equity of an unlevered firm
• B) Borrow on his/her own account
• C) Invest in the equity of a levered firm
• D) Invest in a risk-free asset like T-bills

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Definitions:

Total Assets

The sum of all assets owned by a business, including current, fixed, and intangible assets, representing its overall value.

Ethics

The standards of conduct by which actions are judged as right or wrong, honest or dishonest, fair or not fair.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenues, indicating the company's profitability.

Total Expenses

The sum of all costs and expenses incurred by a business during a specific period, including operating and non-operating expenses.