Which of the Following Is an Example of Restructuring the Firm

question 55

Multiple Choice

Which of the following is an example of restructuring the firm?

• A)Dividends are increased from $1 to $2 per share
• B)A new investment increases the firm's business risk
• C)New equity is issued and the proceeds repay debt
• D)A new board of directors is elected to the firm

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Definitions:

Liquidation

The process of converting a company's assets into cash to pay off creditors before ceasing operations or redistributing assets to shareholders.

Security Interest

A legal claim or lien on collateral that secures the repayment of a debt or performance of some other obligation.

Voidable Preferences

Transactions made by a bankrupt debtor prior to bankruptcy that can be nullified or undone to ensure fair distribution of assets to creditors.

Antecedent Debts

Debts that were incurred prior to a particular event or transaction.