Your fiRm Uses Both Preferred and Common Stock as Well

question 71

Multiple Choice

Your firm uses both preferred and common stock as well as long-term debt to finance its operations. Which one of the following will increase the capital structure weight of the debt, all else
Equal?

• A) An increase in the market price of the common stock.
• B) An increase in the number of shares of preferred stock outstanding.
• C) An increase in the quoted price of the firm's bonds as a percentage of face value.
• D) The exercise of warrants by company employees.
• E) The conversion of convertible bonds into equity shares.

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Definitions:

Lower-Paying Jobs

Employment positions that offer less financial compensation compared to median or high-paying jobs, often requiring less skill or education.

Lorenz Curve

A graphical line representing a society’s deviation from equal wealth allocation.

Gini Index

A measure of statistical dispersion intended to represent the income inequality or wealth inequality within a nation or a social group.

Kuznets Curve

A hypothesized relationship that suggests inequality in wealth and income increases during the early stages of economic development, then decreases as a country becomes more developed.