41. When Liabilities of companies surpasses the assets questions of negative equity rises. During the periods of Sub-Prime crisis, banks were able to lend out more without recovering real cash from its investments which contributed to the vicious circle. Hence net equity was negative as companies became bankrupt and or insolvent. So according to the options given option (b) is correct as, “Many Companies, particularly in the financial services sector, were either going bankrupt or being acquired by surviving entities”. 42. Total Assets is always equivalent to total Liabilities. The debt is a part of liabilities, hence Debt / Total Assets cannot exceed 1 (unless of course there is negative equity). Since all the manufacturing companies are assembled together in one common balance sheet Debt/ Total Assets cannot either exceed 1 or it cannot fall below zero. So the best scenario for a capital- intensive segment is to range somewhere between 10% to 50%. So Option (B) is correct as Debt Ratio (Debt/Assets) should be greater than 0.10 but less than 0.50. 43. If boards of directors are standing up for re-election every one-third in each year then that board is defined as the Classified Board. So option (B) is correct. 44. Preferences that preferred stockholders enjoy are, during the time of liquidation they would be the first choice for paying off before the secured creditors. So option (A) is correct. Solution 41. When Liabilities of companies surpasses the assets questions of negative equity rises. During the periods of Sub-Prime crisis, banks were able to lend out more without recovering real cash from its investments which contributed to the vicious circle. Hence net equity was negative as companies became bankrupt and or insolvent. So according to the options given option (b) is correct as, “Many Companies, particularly in the financial services sector, were either going bankrupt or being acquired by surviving entities”. 42. Total Assets is always equivalent to total Liabilities. The debt is a part of liabilities, hence Debt / Total Assets cannot exceed 1 (unless of course there is negative equity). Since all the manufacturing companies are assembled together in one common balance sheet Debt/ Total Assets cannot either exceed 1 or it cannot fall below zero. So the best scenario for a capital- intensive segment is to range somewhere between 10% to 50%. So Option (B) is correct as Debt Ratio (Debt/Assets) should be greater than 0.10 but less than 0.50. 43. If boards of directors are standing up for re-election every one-third in each year then that board is defined as the Classified Board. So option (B) is correct. 44. Preferences that preferred stockholders enjoy are, during the time of liquidation they would be the first choice for paying off before the secured creditors. So option (A) is correct..

1. 41. When Liabilities of companies surpasses the assets questions of negative equity rises. During
the periods of Sub-Prime crisis, banks were able to lend out more without recovering real cash
from its investments which contributed to the vicious circle. Hence net equity was negative as
companies became bankrupt and or insolvent. So according to the options given option (b) is
correct as, “Many Companies, particularly in the financial services sector, were either going
bankrupt or being acquired by surviving entities”.
42. Total Assets is always equivalent to total Liabilities. The debt is a part of liabilities, hence
Debt / Total Assets cannot exceed 1 (unless of course there is negative equity). Since all the
manufacturing companies are assembled together in one common balance sheet Debt/ Total
Assets cannot either exceed 1 or it cannot fall below zero. So the best scenario for a capital-
intensive segment is to range somewhere between 10% to 50%. So Option (B) is correct as Debt
Ratio (Debt/Assets) should be greater than 0.10 but less than 0.50.
43. If boards of directors are standing up for re-election every one-third in each year then that
board is defined as the Classified Board. So option (B) is correct.
44. Preferences that preferred stockholders enjoy are, during the time of liquidation they would
be the first choice for paying off before the secured creditors. So option (A) is correct.
Solution
41. When Liabilities of companies surpasses the assets questions of negative equity rises. During
the periods of Sub-Prime crisis, banks were able to lend out more without recovering real cash
from its investments which contributed to the vicious circle. Hence net equity was negative as
companies became bankrupt and or insolvent. So according to the options given option (b) is
correct as, “Many Companies, particularly in the financial services sector, were either going
bankrupt or being acquired by surviving entities”.
42. Total Assets is always equivalent to total Liabilities. The debt is a part of liabilities, hence
Debt / Total Assets cannot exceed 1 (unless of course there is negative equity). Since all the
manufacturing companies are assembled together in one common balance sheet Debt/ Total
Assets cannot either exceed 1 or it cannot fall below zero. So the best scenario for a capital-
intensive segment is to range somewhere between 10% to 50%. So Option (B) is correct as Debt
Ratio (Debt/Assets) should be greater than 0.10 but less than 0.50.
43. If boards of directors are standing up for re-election every one-third in each year then that
board is defined as the Classified Board. So option (B) is correct.
44. Preferences that preferred stockholders enjoy are, during the time of liquidation they would
be the first choice for paying off before the secured creditors. So option (A) is correct.