Use the Following Information to Answer the Question(s) Below

question 48

Multiple Choice

Use the following information to answer the question(s) below.
Galt Industries has 50 million shares outstanding and a market capitalization of $1.25 billion. It also has $750 million in debt outstanding. Galt Industries has decided to delever the firm by issuing new equity and completely repaying all the outstanding debt. Assume perfect capital markets.
-Suppose you are a shareholder in Galt industries holding 600 shares,and you disagree with this decision to delever the firm.You can undo the effect of this decision by:

• A) Borrow $6,000 and buy 240 shares of stock
• B) Sell 240 shares of stock and lend $6,000
• C) Borrow $9,000 and buy 360 shares of stock
• D) Sell 360 shares of stock and lend $9,000

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Definitions:

The Grange

Also known as the Patrons of Husbandry, a fraternal organization founded in 1867 to advance the social and economic needs of farmers in the United States.

Farm Output

The total quantity of agricultural products produced by farms, including crops and livestock, within a certain period.

Railroad Rates

The prices charged by rail transport companies for the conveyance of passengers and goods on their networks.

Electoral College

A body of electors established by the United States Constitution, tasked with electing the president and vice president of the United States.