If a corporation repurchases its debt, which of the following statements are TRUE? I The corporation's capitalization will increase
II The corporation's capitalization will decrease
III The market value of the common stock will increase
IV The market value of the common stock will decrease

II and III

Explanation:

The best answer is ii and iii. If a corporation repurchases its debt, then its capitalization will decrease. Corporations   repurchase debt to refinance at smaller interest rates so as to To increase the market value of the corporation's common stock. If corporation has less debt, the common stock would have more value and to reduce the corporation's earnings fluctuation's due to cyclical conditions. Corporate sales fall because of cyclical conditions, but fixed interest charges do not. This causes earnings for common shareholders to reduce in period of falling sales. To reduce this possibility, a corporation can repurchase its debt.

u = 30

continuing your method

= +

subtract from both sides

= - thus

= -

= ⇒ u = 30

the correct answer is b.)