You Are Writing a Comparison of an All-Equity Structure to a Levered

question 31

Multiple Choice

You are writing a comparison of an all-equity structure to a levered capital structure for a firm.It is accurate to state in this comparison that

• A)earnings per share will always be higher in the all-equity structure.
• B)firms will only select the levered structure when individual rates on borrowed funds are lower than corporate rates.
• C)leverage lowers shareholders' returns in bad financial times.
• D)the all-equity firm has a greater advantage the higher the firm's earnings before interest.
• E)leverage improves shareholders' returns regardless of the firm's level of earnings.

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Definitions:

Coercive Appeal

A marketing or persuasive strategy that uses pressure, threats, or intimidation to encourage action or compliance.

Competitors' Offerings

The range of products or services provided by rival companies in the market, which may influence a business's strategic decisions and positioning.

Ripped Abdominal

Muscular definition in the abdominal area, indicating low body fat and well-developed core muscles.

Sex Appeal

The use of sexually suggestive images or features to attract attention to a product or brand.