In General, the Capital Structures Used by fiRms

question 29

Multiple Choice

In general, the capital structures used by firms:

• A)tend to overweigh debt in relation to equity.
• B)are easily explained in terms of earnings volatility.
• C)are easily explained by analyzing the types of assets owned by the various firms.
• D)tend to be those which maximize the use of the firm's available tax shelters.
• E)vary significantly across industries.

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Definitions:

Bursa

A small fluid-filled sac located near joints that reduces friction between tissues, such as bone and tendons.

Fluid

A substance that has no fixed shape and yields easily to external pressure; a gas or (especially) a liquid.

Joint

The point at which two bones are connected, allowing for movement and support.

Contracture

An abnormal tightening or shortening, often resulting in a deformity.