Multiple Choice

Interest is Big Valley's only fixed cash charge.
Big Valley's market value of equity to book value of debt ratio = 1.5.
Big Valley's use of debt to finance assets indicates that Big Valley has ________ the typical firm in the industry.
A) more long-term solvency risk than
B) the same long-term solvency risk as
C) less interest expense than
D) less long-term solvency risk than
E) a lower market value of equity to book value of equity ratio than
Correct Answer:
Verified
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