Equity in a firm with no debt is called:
A)risk-free equity.
B)risky equity.
C)shareholders' equity.
D)unlevered equity.
E)levered equity.

Question

Quizplus · Accepted Answer

Equity in a firm with no debt is called unlevered equity, which means the firm has not taken on any debt or leverage to finance its operations. It is a riskier form of equity compared to levered equity because there is no debt to absorb any losses, but it also has the potential for higher returns. Shareholders' equity (C) is a broader term that includes both unlevered and levered equity. Risk-free equity (A) does not exist in reality as all equity involves some level of risk, and risky equity (B) is too broad and does not specifically refer to equity in a firm with no debt.

Equity in a Firm with No Debt Is Called