If a Firm Is Financed with Both Debt and Equity

question 8

Multiple Choice

If a firm is financed with both debt and equity, the firm's equity is known as

• A)unlevered equity.
• B)levered equity.
• C)preferred equity.
• D)None of the options are correct.

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Definitions:

Deposits

Funds stored in a bank or similar entity for security purposes that have the potential to accrue interest as time passes.

Reserve Requirement

The minimum amount of funds that a bank must hold in reserve against deposit liabilities, set by the central bank.

Excess Reserves

The reserves held by banks over and above the legal or required reserve ratio set by central banking authorities.

New Loans

Recently issued debts or obligations by a lender to a borrower, typically involving a certain amount of money to be paid back with interest.