The Fact That Many Corporations Use Debt Financing as Well

question 27

Multiple Choice

The fact that many corporations use debt financing as well as equity financing creates all of the following except:

• A)The opportunity for a greater expected return for the stockholders
• B)Greater risk for the stockholders
• C)Leverage for the stockholders
• D)Consistently lower debt-to-equity ratios

---

Definitions:

Criminal Commitment

The process of incarcerating an individual found guilty of a crime, or in some cases, detaining someone determined to be mentally unfit to stand trial.

Civil Commitment

A legal process through which an individual with severe mental illness can be mandated to undergo treatment or hospitalization.

M'Naghten Rule

A legal standard used to determine whether a defendant was insane at the time they committed a crime, focusing on whether they understood the nature of their act or knew right from wrong.

Irresistible Impulse Test

A legal test for insanity that holds people to be insane at the time they committed a crime if they were driven to do so by an uncontrollable “fit of passion.”