By Changing the Mix of Securities a Firm Uses for Financing

question 63

Multiple Choice

By changing the mix of securities a firm uses for financing, the financial manager:

• A)Can increase the book value of the firm
• B)Is changing the firm's capital structure
• C)Can increase the market value of the firm
• D)Is changing the firm's dividend policy

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Definitions:

Consideration

The value (usually money, service, or goods) exchanged between parties in a contract that compels them to fulfill their mutual obligations.

Preexisting Duty

An obligation that a party is already bound to by law or by some other agreement. The party may not use this as consideration in a new contract.

Promissory Estoppel

A judicial principle that stops one from retracting a pledge given to another if the latter has justifiably depended on the promise to their disadvantage.

Disputed Amounts

Refers to the sums of money under contention between parties in transactions or contracts, often leading to negotiation or legal actions.