Generating Capital by Means of Debt Financing

question 181

Multiple Choice

Generating capital by means of debt financing:

• A) Involves borrowing money, either from a bank loan or from the use of corporate bonds.
• B) Means that the firm borrowing the money will have to pay interest charges.
• C) May be worth it if the borrowed money is used to implement a marketing plan that earns a return greater than the cost of borrowing the money.
• D) Means that the firm will have to put up some of its assets as a loan guarantee.
• E) All of the above.

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Definitions:

Function

A relation between a set of inputs and a set of permissible outputs with the property that each input is related to exactly one output.

Vertices

Plural of vertex, referring to the corners or angular points where two or more edges meet in a geometrical shape or graph.

Center

In geometry, it refers to the midpoint of a circle or sphere, equidistant from all points on the perimeter or surface.

Standard Form

A way of writing down very large or very small numbers easily. In algebra, it refers to the usual way of writing down equations, focusing on linear equations with the general form Ax + By = C.