Acts of the Shareholders Who Are NOT Official Agents of a Corporation

question 44

True/False

Acts of the shareholders who are NOT official agents of a corporation can legally bind a corporation.

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Definitions:

Financial Leverage

Use of borrowed funds to increase the potential return of an investment, also indicating how much a company relies on debt to finance its assets.

Static Theory of Capital Structure

A financial hypothesis that suggests there is an optimal capital structure for a company where the cost of capital is minimized, and the value of the firm is maximized.

M&M Proposition I

A theorem stating that in a perfect market, the market value of a company is unaffected by how that company is financed, regardless of whether through debt or equity.

Debt

An amount of money borrowed by one party from another, to be repaid with interest.