The Greater the Proportion of Debt Financing Compared with Equity

question 57

Multiple Choice

The greater the proportion of debt financing compared with equity financing for a company the:

• A) lower the future earnings prospects for the company.
• B) greater the ability of the company to meet its interest payments.
• C) greater the degree of financial risk for the company.
• D) lower the expected earnings per share.

---

Definitions:

Neuroticism

A personality trait characterized by anxiety, fear, moodiness, worry, envy, frustration, jealousy, and loneliness.

Illness

A state of being unwell or suffering from a disease or health condition.

Type D Personality

A personality type associated with negative affectivity (worry, irritability) and social inhibition (reticence, lack of self-assurance).

Heart Disease

A range of conditions that affect the heart, including coronary artery disease, arrhythmias, and heart failure.