Which of the Following Is True of Leverage on Firms

question 17

Multiple Choice

Which of the following is true of leverage on firms?

• A)Shareholders prefer a lower leverage ratio than that preferred by management.
• B)The firms that are more strongly influenced by shareholders have higher leverage ratios.
• C)A small debt obligation limits management's ability to use corporate resources in ways that do not benefit investors.
• D)If the leverage ratio is lower,the firm's systematic risk will also be lower

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Definitions:

Algorithm

A process or set of rules to be followed in calculations or other problem-solving operations, especially by a computer.

Mental Image

A representation of a sensory experience in the mind, which can be visual, auditory, or related to other senses, even in the absence of external stimuli.

Dialectical Reasoning

A method of argument for resolving disagreement that involves the exchange of arguments and counter-arguments, aiming to find the truth through reasoned dialogue.

Contextual Intelligence

The aptitude to understand and apply knowledge effectively across varied situations by keenly evaluating the contextual factors.