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Assume an organization’s debt-to-equity ratio is less than 1.0. Which of the following statements is most correct?

a. The organization’s creditors have provided less than $1 in capital per dollar of equity capital.

b. The organization has more equity than debt in its capital structure.

c. An increase in the debt-to-equity ratio would increase the riskiness of the creditors’ position.

d. Answers a. and b. are correct.

e. Answers a., b., and c. are correct. (Hint: Option D is incorrect. It has been marked as incorrect.)

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