In Considering Equity and Debt Financing,which of the Following Statements

question 146

Multiple Choice

In considering equity and debt financing,which of the following statements is true?

• A)Compared to equity financing,debt is a more expensive source of funding.
• B)Interest and dividends payments are required to be made by the issuing corporation.
• C)In general,the higher the proportion of total debt-to-equity ratio,the greater the likelihood the firm will have difficulty in meeting its obligations in some future period.
• D)Most firms prefer to have no debt and rely on equity financing.

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Definitions:

Valued

Considered to hold importance, worth, or usefulness in a particular context.

Discount Rate

The rate applied in discounted cash flow analysis for the assessment of the current value of future expected cash flows.

Present Value

Today's valuation of a future money sum or sequence of cash payments, given a specific rate of return.

Received

Refers to the act of obtaining or taking possession of something, often used in financial transactions.