If a Firm Chooses to Maintain a Fixed Debt-Equity Ratio

If a firm chooses to maintain a fixed debt-equity ratio, they can raise the additional needed funds by:

A) Issuing debt, in which case dividends become the balancing item
B) Issuing debt, in which case the amount of debt itself becomes the balancing item
C) Issuing stock, in which case dividends become the balancing item
D) Issuing stock, in which case no balancing item is needed

Correct Answer:

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