Which of the Following Is a Reason Why High Debt

question 2

Multiple Choice

Which of the following is a reason why high debt ratios might cause firms to lose market share?

• A)Firms with high debt to equity ratio have lower costs of financial distress and hence cannot take advantage of forcing employees to make wage concessions.
• B)Firms with high debt to equity ratio have to pay a major part of their revenue as interest expense reducing the dividend payout ratios.
• C)Because of concerns about its long-term viability and the quality of its products,a highly levered firm may find it difficult to retain and attract customers.
• D)Rivals may view a highly levered firm as a major formidable competitor,and try to improve their product's quality to steal customers.

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Definitions:

Reinforcements

In behavior psychology, any event that strengthens or increases the likelihood of a behavior occurring again.

Person-centered Therapist

A professional who practices a form of psychotherapy that emphasizes the importance of the individual's subjective experience and intrinsic capacity for self-healing and growth.

Transference

The redirection of feelings and desires, especially those unconsciously retained from childhood towards a new object, often observed in psychoanalytic therapy.

Electroconvulsive Therapy (ECT)

A psychiatric treatment in which seizures are electrically induced in patients to provide relief from mental disorders, primarily severe depression.