Answered

Get reliable answers to your questions at Westonci.ca, where our knowledgeable community is always ready to help. Connect with professionals on our platform to receive accurate answers to your questions quickly and efficiently. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.

A company uses 30% common stock and 70% long-term debt to finance its operations. An increase in which one of the following will increase the capital structure weight of debt, all else equal?a. Number of bonds outstandingb. Market price of the common stockc. Book value of the outstanding shares of common stockd. Number of shares of stock outstanding

Sagot :

Answer:

a. Number of bonds outstanding

Explanation:

In the case when  the firm wants to issue  the new bonds but keeping the equity portion constant so the debt weight should increased from 70% to the higher weightage

So as per the given situation, the option a is correct as it also increased the number of outsanding bonds

Therefore the same is to be considered

Hence, the other options seems wrong

Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. We hope this was helpful. Please come back whenever you need more information or answers to your queries. We're here to help at Westonci.ca. Keep visiting for the best answers to your questions.