Question: Explain incentive to take more risk concept with appropriate example. Suppose Renata Pharmaceuticals have some excess cash. They can pay this cash as dividend or

Explain incentive to take more risk concept with appropriate example.

Suppose Renata Pharmaceuticals have some excess cash. They can pay this cash as dividend or repurchase some shares from the market. Explain how the market value of Renata remains same irrespective of any decision made

Titas Gas went through recapitalization. They included debt in their capital structure. This debt will increase their EPS and ROE. Do you agree or disagree with this statement. Explain briefly.

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