Debt May Be the Preferred Form of External Financing for Many

question 107

Multiple Choice

Debt may be the preferred form of external financing for many firms because:

• A) most firms already have too much equity.
• B) tax rates on equity are lower.
• C) debt will not adversely affect the firm's financial ratios.
• D)equity issuance is considered by investors to be a negative sign.

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Definitions:

Feedback

Information provided by an agent (e.g., customer, supervisor) regarding aspects of one’s performance or understanding.

Mock-Up

A scale or full-size model of a design or device, used for teaching, demonstration, design evaluation, promotion, and other purposes.

High-Fidelity

Refers to the reproduction of sound or images that is very faithful to the original, with minimal distortion and a high level of detail.

Assault

An intentional act that creates apprehension of imminent harmful or offensive contact in another person.