By Adding Leverage,the Returns on the Firm Are Split Between

question 5

Multiple Choice

By adding leverage,the returns on the firm are split between debt holders and equity holders,but equity holder risk increases because

• A)interest payments can be rolled over.
• B)dividends are paid first.
• C)debt and equity have equal priority.
• D)interest payments have first priority.

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Definitions:

Freud

Sigmund Freud, an Austrian neurologist and the founder of psychoanalysis, known for his theories of the unconscious mind, mechanisms of repression, and the role of sexual desires.

Id

In Freud’s theory, a term for the most primitive reactions of human personality, consisting of blind striving for immediate biological satisfaction regardless of cost.

Superego

In Freud’s theory, reaction patterns that emerge from within the ego, represent the internalized rules of society, and come to control the ego by punishment with guilt.

Within-Family Differences

Variations or disparities in characteristics, traits, or behaviors among members of the same family.