A Firm's Debt-To-Equity Ratio Varies at Times Because

question 52

Multiple Choice

A firm's debt-to-equity ratio varies at times because

• A) a firm will want to sell common stock when prices are high and bonds when interest rates are low.
• B) a firm will want to take advantage of timing its fund-raising in order to minimize costs over the long run.
• C) the market allows some leeway in the debt-to-equity ratio before penalizing the firm with a higher cost of capital.
• D) All of these are accurate statements.

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Definitions:

Monozygotic

Pertaining to twins that are genetically identical, resulting from a single fertilized egg that splits into two.

Neurotransmitter

Chemical substances in the brain that transmit signals from one neuron to another across synapses.

Heritability Rate

A measure of how much of the variation in a trait among individuals can be attributed to genetic differences.

Attributional Style

The way in which one is disposed toward interpreting outcomes (successes or failures), as in tending to place blame or responsibility on oneself or on external factors.