Solved

Use the Following Information to Answer the Question(s) Below

Question 48

Multiple Choice

Use the following information to answer the question(s) below.
Galt Industries has 50 million shares outstanding and a market capitalization of $1.25 billion. It also has $750 million in debt outstanding. Galt Industries has decided to delever the firm by issuing new equity and completely repaying all the outstanding debt. Assume perfect capital markets.
-Suppose you are a shareholder in Galt industries holding 600 shares,and you disagree with this decision to delever the firm.You can undo the effect of this decision by:


A) Borrow $6,000 and buy 240 shares of stock
B) Sell 240 shares of stock and lend $6,000
C) Borrow $9,000 and buy 360 shares of stock
D) Sell 360 shares of stock and lend $9,000

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions