Bryan Invested in Bryco, Inc

question 301

Multiple Choice

Bryan invested in Bryco, Inc. stock when the firm was financed solely with equity. The firm is now utilizing debt in its capital structure. To unlever his position, Bryan needs to:

• A) Borrow some money and purchase additional shares of Bryco stock.
• B) Maintain his current position as the debt of the firm did not affect his personal leverage position.
• C) Sell some shares of Bryco stock and hold the proceeds in cash.
• D) Sell some shares of Bryco stock and loan it out such that he creates a personal debt- equity ratio equal to that of the firm.
• E) Create a personal debt-equity ratio that is equal to exactly 50% of the debt-equity ratio of the firm.

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Definitions:

Two Factors

In experimental design, refers to experiments that investigate the effect of two independent variables on a dependent variable.

Total Sum

The aggregate or overall total of a series of numbers or quantities.

Squares

In mathematics, the result of multiplying a number by itself.

Factor A

Represents an independent variable or input in an experiment or study that is manipulated to observe its effect on a dependent variable.