If Company Earnings Give a Rate of Return Less Than

question 96

Multiple Choice

If company earnings give a rate of return less than the cost of debt,then it may be advantageous for the firm to be ________.

• A)all-equity
• B)owned mostly by debt holders
• C)half owned by debt holders
• D)one-third owned by equity holders

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Definitions:

Alike

Similar in nature, appearance, or characteristics; having resemblance or correspondence.

Inductive Generalization

A reasoning process that involves drawing broad conclusions from specific instances.

Light

Electromagnetic radiation that is visible to the human eye and is responsible for the sense of sight.

Heat

A form of energy transferred between objects or systems due to a temperature difference, often perceived as warmth.