Which of the Following Statements Is Correct

question 105

Multiple Choice

Which of the following statements is correct?

• A) Increasing the amount of firm debt increases both the expected cash flows to equity holders and the number of shares outstanding.
• B) Increasing the amount of firm debt increases both the expected cash flows to equity holders and the amortization.
• C) Increasing the amount of firm debt increases both the expected cash flows to equity holders and the volatility of those cash flows.
• D) Increasing the amount of firm debt increases both the expected cash flows to equity holders and the tax liability.

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Definitions:

Granite

A coarse-grained igneous rock composed mainly of quartz and feldspar.

Stromatolites

Layered structures formed by the growth of microbial mats, often found in fossil form and considered some of the oldest evidence of life on Earth.

Microscopic Creatures

Tiny organisms that can only be seen with the aid of a microscope, including bacteria, protozoa, and some fungi and algae.

Correlate

The process of establishing a relationship or connection between two or more variables, often used in scientific research to determine causal links or patterns.