单选题 For a firm financed with common stock and fixed-rate debt, an analyst should most appropriately adjust which of the following items for a change in market interest rates?

A、 Debt-to-equity ratio.
B、 Interest expense.
C、 Deferred tax liabilities.

【正确答案】 A

【答案解析】For the purpose of analysis, the value of debt should be adjusted for a change in interest rates. This will change the debt-to-equity ratio. Because changes in interest rates will change the market value of the debt, but not the coupon, interest expense will be unchanged. (However, if a firm has variable-rate debt, interest expense will change when interest rates change, but the market value of the variable-rate debt will not change significantly.)