Which One of the Following Statements Is TRUE

question 46

Multiple Choice

Which one of the following statements is TRUE?

• A) a corporate golf club membership is an example of a nonpecuniary benefit
• B) firms borrowing money have greater flexibility to use that money when there are debt covenants.
• C) when lenders protect themselves from the risk of asset switching by raising the interest rate, the firm's wacc can decrease.
• D) a lender calling in a corporate loan and then lending the funds out to a safer borrower is an example of asset switching.
• E) a supplier substituting a lower-quality raw material without approval is an example of asset switching.