Fill in the blank 1. In a financial ___, the capital structure of a business is

Question

Fill in the blank

1. In a financial ___, the capital structure of a business is altered, usually to optimize the mix of debt of equity, or to adjust the equity interests in the business.

2. Tobin's Q is a measure of economic efficiency estimated as the ratio of market value of assets divided by book value, whereas we use the term ___ to describe the ability to turn book value invested in debt and stockholder's equity into enterprise market value as a ratio of MV/BV.

Multiple Choice:

In the most recent merger wave from 1992-2000: 1.M&A activity increased briskly in all segments of the economy. 2. M&A activity was high in the banking and high technology sectors. 3. Defense spending increased and led to high M&A activity in the defense sector.

a. 1 only

b. 1 and 2 only

c. 2 and 3 only

d. 1,2, and 3

Explanation / Answer

1. In a financial restructuring, the capital structure of a business is altered, usually to optimize the mix of debt of equity, or to adjust the equity interests in the business.

Explanation: Financial restructuring refers to the process of altering the capital structure of a firm. The capital structure of a firm consists of debt and equity. Financial restructuring helps in improving the capital structure of a firm.

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