A Firm That Is Worth $1 Million and Is Financed

question 31

Multiple Choice

A firm that is worth $1 million and is financed with 30% risk-free debt and 70% equity grows in value to $1.5 million. What is its new debt-equity ratio?

• A)25.0%
• B)33.3%
• C)20.0%
• D)26.3%

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Definitions:

Type D Personality

Personality characterized by high levels of negative affectivity (worry, irritability, gloom) and social inhibition (reticence and lack of self-assurance).

Inflammation

A biological response of body tissues to harmful stimuli, such as pathogens, damaged cells, or irritants, characterized by redness, swelling, heat, and pain.

Personality Factors

Fundamental dimensions of individual differences in personality, often identified through factor analysis in psychological research.

Type D Personality

A personality type characterized by high levels of negative affectivity and social inhibition.