Assume the Following Data: Long-Term Debt = 100; Value of Leases

question 25

Multiple Choice

Assume the following data: Long-term debt = 100; Value of leases = 20; Book value of equity = 80.Calculate the debt-equity ratio.

• A)0.50
• B)0.60
• C)1
• D)1.50

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Definitions:

Call Option

An option contract that gives the holder the right, but not the obligation, to buy a specified quantity of an underlying asset at a set price within a specific period.

Strike Price

The predetermined price at which an option's contract can be exercised, allowing for the purchase or sale of the underlying asset.

Strike Price

The price at which the holder of an option contract can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Risk-free

An investment category that promises return payments with zero default risk, often exemplified by treasury bonds of stable governments.