Studies of Capital Structure Changes Have Found That Actions That

question 40

Multiple Choice

Studies of capital structure changes have found that actions that increase leverage have generally been associated with ____ stock returns and actions that decrease leverage are associated with ____ stock returns.

• A) negative; positive
• B) negative; no change in
• C) positive; negative
• D) no change in; negative

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Definitions:

Inventory Costing Method

A method used to assign costs to inventory items, such as FIFO (First-In, First-Out), LIFO (Last-In, First-Out), or weighted average cost.

LIFO

Last In, First Out, an inventory valuation method where the most recently produced or acquired items are sold first, affecting the cost of goods sold and inventory value.

FIFO

"First In, First Out," a method of inventory valuation where the earliest acquired goods are sold first.

Rising Prices

A situation where the general level of prices for goods and services in an economy increases over a period of time.