Equity in a firm with debt is called ________.
A) levered equity
B) risk-free equity
C) unlevered equity
D) preferred equity

Question

Quizplus · Accepted Answer

Equity in a firm with debt is called levered equity because it is affected by the presence of debt and the associated risks and costs. This is different from unlevered equity, which represents the equity in a firm without debt or other forms of financial leverage. Preferred equity is a type of equity that has priority over common equity in terms of dividend payments and liquidation preference, but it may not be directly relevant to the presence of debt in a firm. Risk-free equity is not a realistic concept as all equity investments involve some degree of risk.

Equity in a Firm with Debt Is Called ________