Which of the Following Methods of Financing Increases the Financial

question 8

Multiple Choice

Which of the following methods of financing increases the financial leverage of the business?

• A) Sales of common stock by a C corporation
• B) Sales of bonds by a C corporation
• C) Sales of additional partnership interests by a general partnership
• D) Reinvestment of income earned in the year by a general partnership

---

Definitions:

Voting Paradox

is a situation in social choice theory where collective preferences can be cyclic (A is preferred to B, B is preferred to C, and C is preferred to A), despite the individual preferences being consistent.

Majority-Rule Voting

A decision-making process where the option that receives more than half of the votes is chosen, commonly used in democratic systems and organizations.

Voting Paradox

A situation in social choice theory where collective preferences can be cyclic (i.e., not transitive), even if the preferences of individual voters are not, leading to a lack of consistent aggregation of individual preferences into a coherent group order.

Impossibility Theorem

A principle, also known as Arrow's impossibility theorem, stating that it is impossible to devise a social welfare function that fairly ranks societal preferences in the presence of three or more options.