The Use of High Levels of Debt in Acquisitions Has

question 58

Multiple Choice

The use of high levels of debt in acquisitions has contributed to:

• A) the increase in above-average returns earned by acquiring firms.
• B) an increased risk of bankruptcy for acquiring firms.
• C) the confidence of the stock market in firms issuing junk bonds.
• D) an increase in investments that have long-term payoffs.

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Definitions:

Differing Agendas

Situations where individuals or groups have objectives or priorities that do not align with one another.

Chief Executive Officer

The top executive in a corporation or institution, in charge of making significant business decisions and overseeing all operations.

Nonprofit Organization

An entity that operates for the public or societal benefit, rather than to earn profits for owners or shareholders.

Modify Existing Ideas

The process of adjusting, adapting, or changing current concepts or proposals to create new or improved outcomes.