Which of the Following Statements Is CORRECT, Holding Other Things

question 20

Multiple Choice

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

• A) An increase in the personal tax rate is likely to increase the debt ratio of the average corporation.
• B) If changes in the bankruptcy code make bankruptcy less costly to corporations, then this would likely reduce the debt ratio of the average corporation.
• C) An increase in the company's degree of operating leverage is likely to encourage a company to use more debt in its capital structure.
• D) An increase in the corporate tax rate is likely to encourage a company to use more debt in its capital structure.
• E) Firms whose assets are relatively liquid tend to have relatively low bankruptcy costs, hence they tend to use relatively little debt.

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Definitions:

Aggression

Behavior intended to harm or injure another individual, whether physically or verbally.

Increased Aggression

A heightened state of anger, hostility, or readiness to confront, often resulting from frustration or perceived threats.

Violence-Viewing Effect

The increase in aggressive behavior or attitudes that can occur after exposure to violent content in media.

Unpunished

Referring to actions or behaviors that do not receive any form of penalty or disciplinary action, potentially leading to a lack of deterrent for undesirable behaviors.