Your Firm Uses Both Preferred and Common Stock as Well

question 75

Multiple Choice

Your firm uses both preferred and common stock as well as long-term debt to finance its operations.Which one of the following will increase the capital structure weight of the debt,all else equal?

• A) an increase in the market price of the common stock
• B) an increase in the number of shares of preferred stock outstanding
• C) an increase in the quoted price of the firm's bonds as a percentage of face value
• D) the exercise of warrants by company employees
• E) the conversion of convertible bonds into equity shares

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Definitions:

Private Property

Owned assets or possessions that are legally recognized and protected, excluding those owned by government entities.

Freedom of Enterprise

The freedom for individuals to start and operate private businesses in search of profits with minimal government intervention.

Competition

The economic rivalry between companies or individuals for a larger share of a market, leading to better quality products and services at lower prices.

Competition

The rivalry among sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix.