A Firm That Makes Extensive Use of Long-Term Liabilities to Meet

question 24

Multiple Choice

A firm that makes extensive use of long-term liabilities to meet its financing needs is

• A)using financial leverage
• B)likely to default on these liabilities
• C)could be more profitable for its owners than one that doesn't use long-term liabilities
• D)both a and c are correct

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Definitions:

Common Filters

Cognitive biases or perspectives that influence how individuals perceive and interpret information.

Personality

The combination of characteristics or qualities that form an individual's distinctive character.

Attitudes

A predisposition to respond in a favorable or unfavorable manner to a particular idea, object, person, or situation.

Fundamental Attribution Error

The bias of overattributing behaviors of others to their personal characteristics, while underestimating situational factors.