If a firm is financed with both debt and equity, the firm's equity is known as
A)unlevered equity.
B)levered equity.
C)preferred equity.
D)None of these options.

Question

Quizplus · Accepted Answer

When a firm is financed with both debt and equity, the equity is known as levered equity because it is affected by the use of debt or leverage. This is in contrast to unlevered equity, which refers to the equity of a firm that is financed solely by equity capital without any debt. Preferred equity is a specific type of equity that has priority over common equity in terms of dividends and liquidation preference.

If a Firm Is Financed with Both Debt and Equity