According to Rajan and Zingales, Debt Ratios of Individual Companies

question 41

Multiple Choice

According to Rajan and Zingales, debt ratios of individual companies depend on:
I.size: large firms have higher debt ratios;
II.tangible assets: firms with high ratios of fixed assets to total assets have higher debt ratios;
III.profitability: more profitable firms have lower debt ratios;
IV.market to book: firms with higher ratios of market-to-book value have lower debt ratios;
V.market structure: firms with monopoly power have higher debt ratios

• A)I and II only
• B)I, II, and III only
• C)I, II, III, and IV only
• D)I, II, III, IV, and V

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Definitions:

Fuel-Cell Cars

Vehicles that generate their power from a fuel cell, which produces electricity through a chemical reaction between hydrogen and oxygen, emitting only water.

Combustion Engine

An engine that generates mechanical power by burning a fuel-air mixture to create an explosive reaction.

Hydrogen

A chemical element with the symbol H and atomic number 1, known as the lightest element in the universe and a primary component in water molecules.

Commercial Energy

Energy produced and sold for profit, including electricity, natural gas, and other fuels used in the industrial, commercial, and residential sectors.