Holding everything else constant, which of the following statements is TRUE? * If amendments to the bankruptcy code make bankruptcy less difficult for companies, the average corporation's debt ratio will likely decrease. An rise in the personal tax rate is likely to increase the average corporation's debt ratio. A rise in a company's operating leverage is likely to allow it to use more debt in its capital structure. An rise in the corporate tax rate is likely to allow a company's capital structure to incorporate more debt. Firms with relatively stable assets have relatively low bankruptcy costs, so they use relatively little debt.
Holding everything else constant, which of the following statements is TRUE? * If amendments to the bankruptcy code make bankruptcy less difficult for companies, the average corporation's debt ratio will likely decrease. An rise in the personal tax rate is likely to increase the average corporation's debt ratio. A rise in a company's operating leverage is likely to allow it to use more debt in its capital structure. An rise in the corporate tax rate is likely to allow a company's capital structure to incorporate more debt. Firms with relatively stable assets have relatively low bankruptcy costs, so they use relatively little debt.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 17MC
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