A Firm Increases Its Debt Ratio from 50% to 60

question 70

Multiple Choice

A firm increases its debt ratio from 50% to 60%.In the absence of taxes,an investor can offset the change in capital structure by:

• A) selling part of her holding and buying debt.
• B) borrowing money and investing it in the firm's equity.
• C) holding a diversified portfolio.
• D) switching her investment to convertible bonds.

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Definitions:

Per Capita Energy

The average amount of energy consumed per person within a specific population or area.

Degree Celsius

A unit of measurement for temperature where 0 degrees represents the freezing point of water, and 100 degrees represents the boiling point at sea level.

Average Person

A hypothetical individual who represents the common or typical characteristics of a group, often used in statistical and economic models.

Trash

Waste material or unwanted items that are discarded, often sent to landfills or recycling centers for disposal.