All Else Equal, Which of the Following Would Cause a Decrease

question 27

Multiple Choice

All else equal, which of the following would cause a decrease in the debt-equity (based on market value) ratio?

• A)A firm repurchases some of its shares.
• B)Dividends are paid.
• C)The stock price increases.
• D)All of the above will result in a decrease in the debt-equity ratio, all else equal.

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Definitions:

Discharged

In legal terms, released or freed from an obligation, duty, or liability.

Incidental Beneficiary

A third party who may benefit from a contract between two other parties, albeit unintentionally and without the legal right to enforce the contract terms.

Enforce Agreement

The legal process of ensuring that the terms of a contract are carried out as agreed upon by the parties.

Restatement

Secondary legal sources that seek to clarify, explain, and illustrate the principles of a particular field of law to guide the courts in how the law should be applied.