T.L.C.Enterprises just revised its capital structure from a debt-equity ratio of 0.30 to a debt-equity ratio of 0.45.The firm's shareholders who prefer the old capital structure should:
A)borrow funds and purchase more shares
B)sell some shares and hold the sale proceeds in cash
C)sell some shares and loan out the sale proceeds
D)sell all of their shares and loan out the entire sale proceeds
E)do nothing

Question

Quizplus · Accepted Answer

Shareholders who prefer the old capital structure can sell some shares and loan out the sale proceeds to personally adjust their financial leverage to match the firm's previous debt-equity ratio.

TLCEnterprises Just Revised Its Capital Structure from a Debt-Equity Ratio