If a firm has issued both debt and equity to finance its ass

If a firm has issued both debt and equity to finance its assets, what is true about the firm? a. Creditors own a portion of the firm’s assets b. The firm must pay a dividend at least once a year c. Stockholders own a portion of the firm’s assets d. The total debt issued must be smaller than the total equity issued e. The book value of the firm’s assets must be smaller than the book value of the equity

Solution

Answer : \"e. The book value of the firm’s assets must be smaller than the book value of the equity\"

=> The book value of the firm\'s assets is calculated as \"Total Assets minus Total debt liabilities\" which will be always smaller than the book value of the equity shareholding.