If a Firm Chooses to Maintain a Fixed Debt-Equity Ratio

question 69

Multiple Choice

If a firm chooses to maintain a fixed debt-equity ratio, they can raise the additional needed funds by:

• A)Issuing debt, in which case dividends become the balancing item
• B)Issuing debt, in which case the amount of debt itself becomes the balancing item
• C)Issuing stock, in which case dividends become the balancing item
• D)Issuing stock, in which case no balancing item is needed

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Definitions:

PEN Dimensions

A psychological theory focusing on three major traits of personality: Psychoticism, Extraversion, and Neuroticism.

Hans Eysenck

A British psychologist known for his theories on personality and intelligence, emphasizing genetics over environment.

Neurological Functioning

Refers to the proper operation of the nervous system, including the brain, spinal cord, and peripheral nerves, which enables thought, behavior, and bodily functions.

Big Five Personality Traits

A model outlining five broad dimensions of human personality: Openness, Conscientiousness, Extraversion, Agreeableness, and Neuroticism.