A Firm Is Currently Financed with $2 Million in Debt

question 27

Multiple Choice

A firm is currently financed with $2 million in debt and $6 million in equity. What will happen to its debt-equity ratio if it simultaneously issues another $2 million in debt and $2 million in
Equity?

• A)The debt-equity ratio would increase from 33 1/3% to 100%.
• B)The debt-equity ratio would increase from 25% to 33 1/3%.
• C)The debt-equity ratio would be unchanged.
• D)The debt-equity ratio would increase from 33 1/3% to 50%.

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Definitions:

Union-Made Component

Products or components that are manufactured by workers who are members of a labor union, often indicating adherence to certain labor standards and support for labor rights.

Prohibited Issue

Topics or actions that are banned or not allowed, typically in the context of legal, regulatory, or organizational policies.

Multiemployee Bargaining

A negotiation process involving multiple employees or their representatives and an employer to establish collective employment terms.

Coordinated Bargaining

A bargaining strategy where multiple negotiating parties collaborate or coordinate their efforts to achieve common or compatible goals.