If a Firm Has Twice as Much Equity as Debt

question 40

Multiple Choice

If a firm has twice as much equity as debt in its capital structure,then the firm is financed with:

• A) 75.0% debt.
• B) 66.7% equity.
• C) 40.0% debt.
• D) 33.3% equity.

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Definitions:

Milgram

A psychologist known for his research on obedience, revealing how ordinary people can commit extraordinary acts under authority pressure.

Obedience

Following the commands or guidance of an authority figure without questioning.

Confederates

Individuals who are part of a study's design and know the experiment's aims but pretend to be participants in order to manipulate situations as required by the research.

Confederate

An individual who is part of an experiment but pretends to be a participant while actually working for the researcher, used to manipulate social interactions as part of the experimental procedure.