A Management That Wanted to Increase the Financial Leverage of Its

question 10

Multiple Choice

A management that wanted to increase the financial leverage of its firm would:

• A) raise additional capital by selling common stock.
• B) use excess cash to purchase preferred stock for the treasury.
• C) raise additional capital by selling fixed interest rate long-term bonds.
• D)try to increase its ROI by increasing asset turnover.

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Definitions:

Cathode

The electrode in a battery or electrochemical cell towards which positive ions move, typically where reduction reactions take place.

Diode

An electronic component that allows current to flow in one direction only, functioning as a one-way valve in electrical circuits.

Negative Lead

An electrical connection that serves as the return path for current in a circuit, often marked with a minus (-) symbol or black color in electronics.