Which One of the Following Events Increases the Debt/equity Ratio

question 52

Multiple Choice

Which one of the following events increases the debt/equity ratio?

• A)Purchase of treasury stock
• B)Sale of treasury stock for more than its cost
• C)Sale of treasury stock for less than its cost
• D)Payment of cash dividends that were previously declared

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Definitions:

Invisible Hand Principle

An economic theory proposed by Adam Smith, suggesting that individuals' pursuit of self-interest in free markets leads to economic prosperity and efficiency as if guided by an invisible hand.

Market Prices

The current value at which goods and services are bought and sold in the market, determined by supply and demand forces.

Economic Well-being

A broad measure of prosperity among individuals or nations, incorporating income, employment, and access to resources and services conducive to a high quality of life.

Market Economy

An economic system where supply and demand from consumers and businesses dictate the production and pricing of goods and services.