Which of the Following Statements About Debt Is True

question 60

Multiple Choice

Which of the following statements about debt is true?

• A) Increasing debt increases the firm's flexibility.
• B) As debt increases, distress costs decrease.
• C) Using debt causes a loss of ownership by the firm.
• D) Using debt allows the firm to earn money using someone else's money.
• E) As the level of debt increases, the firm's credit rating begins to matter less.

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Definitions:

Drafting Stage

The phase in the writing or design process where preliminary versions are created before finalizing the product.

Collaborative Piece

A work produced through the joint effort of multiple contributors.

Consistent Style

The uniform use of language, formatting, and presentation techniques throughout a document or series of communications to maintain clarity and professionalism.

Rainforests

Dense, tropical or subtropical forests that receive a high amount of rainfall annually, rich in biodiversity.