Which of the Following Statements Is True

question 21

Multiple Choice

Which of the following statements is true?

• A) The use of debt may lead to financial distress and bankruptcy, thus firms that sell expensive, durable products that may have warranties and ongoing service requirements tend to use less debt.
• B) The use of debt may lead to financial distress and bankruptcy, thus firms that sell expensive, durable products that may have warranties and ongoing service requirements tend to use more debt.
• C) Companies with a large proportion of tangible assets should be more willing to use debt than firms with mostly intangible assets.
• D) Companies with a large proportion of tangible assets should be less willing to use debt than firms with mostly intangible assets.
• E) Both (a) and (c)