The Use of Leverage as a Way to Signal ________

question 31

Multiple Choice

The use of leverage as a way to signal ________ information to investors is known as the signaling theory of debt.

• A) good
• B) bad
• C) random
• D) none of the above

---

Definitions:

Customizing

The process of modifying or tailoring products or services to fit specific requirements or preferences of a consumer.

Manufacturing Cost

The total cost incurred by a company to produce goods, including labor, material, and overhead costs.

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or services, calculated in advance based on estimated overhead costs and an allocation base.

Machine-Hours

Machine-hours are a measure of the amount of time a machine is operated, used in allocating manufacturing overhead based on usage.