Asked by Katelyn Nartiff on Jun 19, 2024
Verified
Nature of assets will affect the optimal level of debt for a firm.
Nature of Assets
The inherent characteristics that define the resources owned by a business, potentially providing economic value or benefit in the future.
Optimal Level
The most efficient, effective, or desirable amount or degree of something.
- Grasp how the nature of assets impacts the optimal level of debt.
Verified Answer
AA
Aleesha ArmstrongJun 23, 2024
Final Answer :
True
Explanation :
Firms with more tangible and less risky assets can typically support higher levels of debt because these assets can serve as collateral, reducing the risk for lenders and allowing the firm to obtain debt more easily and possibly at lower costs.
Learning Objectives
- Grasp how the nature of assets impacts the optimal level of debt.