As a Firm Increases Its Level of Debt Relative to Its

question 28

Multiple Choice

As a firm increases its level of debt relative to its level of equity, the firm is ________.

• A) increasing the fraction of its equity
• B) decreasing the fraction of its debt
• C) decreasing its leverage
• D) increasing its leverage

---

Definitions:

Gas-Guzzling SUVs

describes sport utility vehicles that are highly inefficient in fuel usage, typically consuming a large amount of gasoline compared to smaller, more fuel-efficient cars.

Intergenerational Mobility

The changes in social status that occur from one generation to the next within a family or household.

Socioeconomic Status

A measure of an individual's or family's economic and social position relative to others, based on income, education, and occupation.

Intragenerational Mobility

The social movement of individuals within their own lifetime, often measured through changes in income, status, or occupation.