Multiple Choice
An investor owns 500 shares of stock in a Montreal firm with a debt/equity ratio = 1.0. The investor prefers a debt/equity ratio = 1.5. If the stock price is $2 per share, what should the investor do?
A) Borrow $500 and buy 250 new shares.
B) Borrow $1,500 and buy 750 new shares.
C) Borrow $2,500 and buy 1,250 new shares.
D) Sell 250 shares and lend $500.
E) Sell 25 shares and lend $50.
Correct Answer:
Verified
Correct Answer:
Verified
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