A Company with a Higher Level of Gearing Will Have

question 40

Multiple Choice

A company with a higher level of gearing will have:

• A)a high liabilities/total assets ratio.
• B)a lower owners' equity/total assets ratio.
• C)a higher owners' equity/total assets ratio.
• D)Both A and B.

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Definitions:

Call Option Values

The price of a call option, which grants the holder the right (but not the obligation) to buy an underlying asset at a specified price before a specified date.

Dividend-Payout Policies

The strategies and guidelines a company uses to decide how much of its earnings will be paid out to shareholders as dividends.

Month of May

The fifth month of the year in the Gregorian calendar, often associated with spring in the Northern Hemisphere and autumn in the Southern Hemisphere.

American Call Option

A type of options contract that allows the holder to buy the underlying asset at a specified price at any time before the expiration date.