Question: The more debt the firm issues, the higher the interest rate it must pay. That is one important reason why firms should operate at conservative

The more debt the firm issues, the higher the interest rate it must pay. That is one important reason why firms should operate at conservative debt levels.” Explain fully your position on this statement.

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In case increasing interest of debt it may reflect increasing risk that debt holders to bear What is relevant is the total cost of capital ie of debt and equity MM because of arbitrage total cost of c... View full answer

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