When Using Equity Financing, Firms Run the Risk of ________

question 60

Multiple Choice

When using equity financing, firms run the risk of ________.

• A)losing a controlling interest to shareholders
• B)acquiring capital through the sale of shares
• C)incurring an unmanageable amount of debt
• D)falling victim to currency exchange rates

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Definitions:

Economic Policy

The actions taken by a government to influence its economy, including fiscal policy (taxing and spending practices) and monetary policy (control of the money supply and interest rates).

Progressive Taxes

A tax system in which the rate of taxation increases as the taxable amount increases, thereby placing a higher financial burden on individuals or entities with higher incomes.

Regressive Taxes

Taxes that take a larger percentage of income from low-income earners than from high-income earners, inversely related to the taxpayer's ability to pay.

Flat Tax

A tax system with a constant marginal rate, usually applied to individual or corporate income.