All of the Following Are Likely to Result in the Use

question 36

Multiple Choice

All of the following are likely to result in the use of less debt in a company's capital structure EXCEPT

• A) desire to maintain financial flexibility.
• B) desire to maintain a high credit rating.
• C) insufficient internal funds.
• D) a decrease in a company's marginal tax rate.

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Definitions:

Mergers

The combination of two or more companies into a single entity, typically to increase market share or reduce competition.

Standard Oil Case

A 1911 antitrust case in which Standard Oil was found guilty of violating the Sherman Act by illegally monopolizing the petroleum industry. As a remedy, the company was divided into several competing firms.

U.S. Steel Case

The antitrust action brought by the federal government against the U.S. Steel Corporation in which the courts ruled (in 1920) that only unreasonable restraints of trade were illegal and that size and the possession of monopoly power were not by themselves violations of the antitrust laws.

Cellophane Case

The Cellophane Case refers to a landmark antitrust case involving DuPont's monopoly on the cellophane market, highlighting issues of market definition and competition.