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

---

Definitions:

Character and Skill

Attributes that define an individual’s moral qualities and abilities in performing tasks or professions.

Penalties

Fines or other forms of punishment imposed for violating a rule, law, or contract.

Noncompetition Clauses

Contractual agreements that restrict one party from engaging in similar business or trade in competition against another party.

Ancillary Agreements

Additional agreements that are ancillary to a main agreement, providing for supplementary details and obligations not covered in the primary contract.