Equity Holders Have an Incentive to ________ the Volatility of a Firm's

question 88

Multiple Choice

Equity holders have an incentive to ________ the volatility of a firm's assets because they benefit from such an increase at a cost to ________.

• A) decrease, debt holders
• B) decrease, suppliers
• C) increase, directors
• D) increase, debt holders

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Definitions:

Total Stockholders' Equity

The total value of a company's assets minus its liabilities, representing the equity stake of investors in the company.

Treasury Stock

Shares that were once outstanding but were bought back by the company and are held in its treasury.

Repurchase Price

Repurchase price is the amount of money a company agrees to pay to buy back its own shares or bonds from investors, often determined at the time of the repurchase agreement.

Total Assets

The sum of all assets, both current and non-current, that a company owns.