Debt May Be the Preferred Form of External Financing for Many

question 107

Multiple Choice

Debt may be the preferred form of external financing for many firms because:

• A) most firms already have too much equity.
• B) tax rates on equity are lower.
• C) debt will not adversely affect the firm's financial ratios.
• D)equity issuance is considered by investors to be a negative sign.

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Definitions:

Dopamine

A neurotransmitter in the brain that plays a key role in regulating mood, motivation, and reward, among other functions.

Action Potential

A rapid, temporary change in the electrical charge of a cell membrane, essential for nerve signal transmission.

Dendrite

A branched projection of a neuron that receives signals from other neurons or sensory stimuli and conducts these to the cell body.

Axon

An axon is a long, slender projection of a nerve cell, or neuron, that typically conducts electrical impulses away from the neuron's cell body.