Use the Following Information to Answer the Question(s) Below

question 48

Multiple Choice

Use the following information to answer the question(s) below.
Galt Industries has 50 million shares outstanding and a market capitalization of $1.25 billion. It also has $750 million in debt outstanding. Galt Industries has decided to delever the firm by issuing new equity and completely repaying all the outstanding debt. Assume perfect capital markets.
-Suppose you are a shareholder in Galt industries holding 600 shares,and you disagree with this decision to delever the firm.You can undo the effect of this decision by:

• A) Borrow $6,000 and buy 240 shares of stock
• B) Sell 240 shares of stock and lend $6,000
• C) Borrow $9,000 and buy 360 shares of stock
• D) Sell 360 shares of stock and lend $9,000

---

Definitions:

Macroeconomics

The branch of economics that studies the behavior and performance of an economy as a whole, focusing on aggregate phenomena such as inflation, national income, and unemployment.

Intermediate Goods

Products used in the production process of final goods but not part of the final product.

Final Goods

Products that have completed the production process and are ready for sale to the end consumer, not to be further processed or resold.

Macroeconomics

Macroeconomics is the branch of economics that examines the behavior and performance of an economy as a whole, focusing on aggregate outcomes such as economic growth, inflation, and unemployment.