Find the Debt-To-Value Ratio for a Firm with a Debt-To-Equity

question 75

Multiple Choice

Find the debt-to-value ratio for a firm with a debt-to-equity ratio of 1.

• A)⅓
• B)½
• C)³/₅
• D)⅔
• E)⁵/₇

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Definitions:

Call Value

The price at which a bond or other debt security can be redeemed by the issuer before its maturity date.

Exercise Price

The stipulated price per share at which the holder of a stock option is entitled to buy or sell the stock.

Risk-Free Rate

The theoretical rate of return on an investment with no risk of financial loss, often represented by the yield on government bonds.

Option Contracts

Agreements between two parties granting one the right, but not the obligation, to buy or sell an asset at a pre-agreed price within a specified time frame.