Question: Question 4 (2 points) What affect would an increase in the costs of bankruptcy have on the capital structure of a firm? Question 4 options:

Question 4 (2 points)

What affect would an increase in the costs of bankruptcy have on the capital structure of a firm?

Question 4 options:

Higher bankruptcy costs make debt less expensive, so firms will use more debt and less equity.

Higher bankruptcy costs make debt more expensive, so firms will use less debt and more equity.

Bankruptcy costs have no impact on the capital structure decision.

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