Firms Tend to Retire Debt When

question 18

Multiple Choice

Firms tend to retire debt when

• A)their stock price is deteriorating.
• B)their debt ratio exceeds that of their peers.
• C)interest rates have increased above previous levels.
• D)all of the above.

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Definitions:

Operating Activities

Activities directly related to the production and delivery of goods and services, which are central to a company's operations and cash flow.

Residual Value

The estimated amount that an asset is expected to be worth at the end of its useful life.

Straight-Line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its useful life.

Depreciable Asset

An asset that loses value over time due to wear and tear, and its cost is expensed across its useful life.