Given the same firm, its debt financing cost is normally relatively lower than its equity financing cost

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Given the same firm, its debt financing cost is normally relatively lower than its equity financing cost mainly BECAUSE __________________.

Debt is more risky than equity.

Debt financing is risk free.

Firms issue less debt than equity.

Firms issue more debt than equity.

Debt holders have superior claim rights to a firm's cash flow over equity holders in general.

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Corporate Finance

ISBN: 9781265533199

13th International Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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Posted Date: Feb 12, 2024 08:16 AM

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Given the same firm, its debt financing cost is normally relatively lower than its equity financing cost

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Corporate Finance

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