Which of the Following Characterizes a Highly Leveraged Company

question 91

Multiple Choice

Which of the following characterizes a highly leveraged company?

• A)high total assets relative to total debt
• B)high total debt relative to total assets
• C)high total debt relative to inventories
• D)high total interest payments relative to total debt

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Definitions:

Securities Act of 1933

A United States federal law enacted as a result of the stock market crash of 1929, requiring that securities sold in the United States be registered and that investors receive significant information about securities being offered.

Due Diligence Defense

A legal defense used in securities law, indicating that the defendants conducted a thorough investigation and did not find any misrepresentations or omissions.

Prospectus

A formal document that companies must publish when offering their shares to the public, detailing their business and financial status.

Insider Trading

The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.