Which of the Following Statements Is True

question 56

Multiple Choice

Which of the following statements is true?

• A)When a firm issues bonds of equal or higher priority to its existing debt, the value of both the existing bonds and the value of the equity will decrease.
• B)When a firm can issue bonds of equal or higher priority than its existing bonds, the value of the firm is decreased due to the higher cost of debt capital.
• C)Although the value of a firm is unchanged if it can issue debt of equal or greater priority to its existing debt, its cost of debt capital will be higher.
• D)Both A and C are true.

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Definitions:

American Government Officials

Individuals who hold positions of authority within the structure of the United States government.

White-collar Deviance

Non-violent crimes committed by individuals in higher social classes during the course of their occupation, including fraud, embezzlement, and insider trading.

Corporate Deviance

Unethical or illegal actions taken by companies or individuals acting on their behalf, often for financial gain or competitive advantage.

Occupational Deviance

Actions or behaviors considered deviant within a work or professional setting, including abuse of powers, embezzlement, and professional misconduct.