Which of the Following Is True of the Competitive Dynamics

question 6

Multiple Choice

Which of the following is true of the competitive dynamics of an industry?

• A)An increase high leverage ratio could be indicative of a firm's intention to increase production.
• B)Leverage has no impact on the competitive dynamics of an industry.
• C)An increase in leverage is usually indicative of defensive behaviour.
• D)The greater a firm's leverage,the less its incentive to produce a high level of output.

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Definitions:

Discount on Bonds Payable

The shortfall between a bond's listed face value and the price it achieves in the market when it ends up selling for less than that face value.

Face Amount

The face amount is the nominal or dollar value printed on a financial instrument like a bond or insurance policy, representing the amount due at maturity or the coverage amount.

Bond Redemption

A financial term referring to the process of repaying the principal amount of a bond at its maturity date.

Market Value

Market value refers to the price at which an asset would trade in a competitive auction setting.