As a company increases the weight of debt in its capital structure, ________. a. Its cost of
Question:
As a company increases the weight of debt in its capital structure, ________.
a. Its cost of debt capital falls
b. The weight of equity capital also increases
c. The value of the interest tax shield decreases
d. Its possibility of financial distress increases
Step by Step Answer:
d Its possibility of financial distress increases The higher ...View the full answer
Related Video
Interest, debt, finance, and capital markets are all important concepts in the world of economics and business. Interest is the cost of borrowing money, and it is typically expressed as a percentage of the amount borrowed. Debt is the money that is borrowed, and it has to be repaid with interest. Finance is the study of how individuals, companies, and organizations manage their money and investments. Capital markets are the places where companies and governments can raise money by selling stocks and bonds to investors. These markets play an important role in the overall economy by helping to fund investment and growth.
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