As a Company Issues More Debt

question 13

Multiple Choice

As a company issues more debt:

• A)Its leverage decreases.
• B)The share of financing from equity increases.
• C)The expected return to equity holders falls.
• D)Risk increases.

---

Definitions:

Social Situation

The environmental and social context in which individuals find themselves, which can influence thoughts, behaviors, and emotions.

Environmental Situation

The specific conditions, circumstances, or factors surrounding and affecting an organism or community at a particular time and place.

Consistency

The quality of achieving a level of performance or following a pattern of behavior over time, showing reliability and uniformity.

Distinctiveness

A principle in social psychology that explains how individuals highlight and perceive the unique features of a person or an object in comparison to others.