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Debt-Utilization Ratios Provide an Indication of the Way the Firm

question 10

True/False

Debt-utilization ratios provide an indication of the way the firm is financed between debt (lenders) and equity (owners), and therefore helps the analyst determine the amount of financial risk present in the firm.


Definitions:

Semistrong-Form Market Efficiency

A form of market efficiency that posits all public information is already reflected in stock prices, alongside historical data.

Weak-Form Market Efficiency

A form of market efficiency where all past trading information is already reflected in stock prices, assuming that investors cannot earn excess returns by analyzing historical price trends.

Strong-Form Market Efficiency

Describes a market where all information, public and private, is reflected in stock prices, and nobody can achieve superior gains.

Market Value

The current quoted price at which an asset or a service can be bought or sold.

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