Firms That Maintain a Constant Ratio of Debt-Equity Over a Variable

question 77

Multiple Choice

Firms that maintain a constant ratio of debt-equity over a variable business cycle may find that:

• A)Debt has grown too large, too fast
• B)It is more difficult to maintain a stable dividend
• C)Debt covenants always accommodate more debt, but often prevent debt prepayment
• D)Equity is always less expensive to obtain than debt

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Definitions:

Multiple Choice

A type of questionnaire or test format where a participant selects the correct answer(s) from several possible options.

Essay Test

An assessment method that requires the test taker to compose responses to questions in extended written form, allowing for the examination of higher-order cognitive skills.

Fencing Class

A training or instructional session focused on the sport of fencing, which involves combat between two participants using swords.

Operant Conditioning

A method of learning where behavior modification is achieved by either reinforcing or punishing actions.