Big City Electric is a regulated monopoly providing electric services in a large city. Property, plant, and equipment dominate the asset side of the balance sheet. Which of the following is not true?
a. It relies more on long-term debt than shareholders' equity to finance these facilities.
b. It has a debt-equity ratio of 50% or less.
c. The regulated monopoly status practically eliminates the risk of default or bankruptcy, so Big City Electric faces a relatively low borrowing cost.
d. Big City Electric's production and transmission facilities can serve as collateral for the debt.
e. none of the above
B
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