TLCEnterprises Just Revised Its Capital Structure from a Debt-Equity Ratio

question 43

Multiple Choice

T.L.C.Enterprises just revised its capital structure from a debt-equity ratio of 0.30 to a debt-equity ratio of 0.45.The firm's shareholders who prefer the old capital structure should:

• A)borrow funds and purchase more shares
• B)sell some shares and hold the sale proceeds in cash
• C)sell some shares and loan out the sale proceeds
• D)sell all of their shares and loan out the entire sale proceeds
• E)do nothing

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Definitions:

Fraudulent Activity

An illegal act involving the intentional deception or misrepresentation that an individual or entity makes to gain a benefit or advantage.

Debit Memorandum

A document or entry recorded by an entity that decreases a balance in another's account, typically used in adjustments between businesses.

Cash Balance

The amount of cash a company has on hand at a given time, reflecting its liquidity.

Custody

The protective care or guardianship of someone or something, often used in legal contexts to refer to the care of children or assets.