Less Debt Inc

question 45

Multiple Choice

Less Debt Inc.just revised its capital structure such that the firm's debt-equity ratio decreased from 0.80 to 0.40.Those individual investors who prefer the old capital structure:

• A)should sell half of their equity holdings and invest in cash
• B)should loan out funds equivalent to the amount invested in Less Debt
• C)can replicate that structure by increasing their use of homemade leverage
• D)should sell half of their equity holdings and loan out the net proceeds of the sale
• E)can replicate that structure by reducing their debt and doubling their investment in the firm

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Definitions:

Facial Expressions

Facial expressions are configurations of the facial muscles that convey the emotional states of an individual to observers.

Hand Gestures

Movements of the hands and arms used to communicate ideas or intentions, often complementing verbal communication.

Imitate

To copy or mimic the actions, behavior, or appearance of someone or something.

Individualist Cultures

Societies that emphasize personal achievements and individual rights, often at the expense of community and collective well-being.