Which of the Following Statements About Debt Ratios Is (Are)supported

question 57

Multiple Choice

Which of the following statements about debt ratios is (are) supported by the empirical evidence?

• A)Firms with high accounting profits and more tangible assets tend to have lower debt ratios, all else equal.
• B)Firms with high corporate income tax rates tend to issue more debt, but often have relatively low debt ratios.
• C)Firms that generate higher stock returns use more debt and have higher debt ratios.
• D)Both A and B are supported by the empirical evidence.

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Definitions:

Social Function

The role or contribution of an activity, behavior, or institution toward the maintenance and stability of a society.

Individual

An individual person separate from a collective, category, or kin.

U.S. Constitution

The supreme law of the United States of America, outlining the national framework of government, its powers, and the rights of its citizens.

John Locke

An English philosopher and physician, often considered one of the most influential of Enlightenment thinkers, known for his contributions to political philosophy and epistemology.