If a Firm Must Issue Subordinated Debentures Instead of Equipment

question 39

True/False

If a firm must issue subordinated debentures instead of equipment trust certificates, the marginal cost of capital may rise even though the optimal capital structure is maintained.

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Definitions:

Quality Control Team

A group of professionals focused on ensuring that products or services meet established quality standards and customer expectations.

Strategy Implementation

The process of executing the steps and actions necessary to carry out a defined strategy.

Potential Course

A possible path or direction that can be taken in the future, often in the context of planning or decision-making.

Economies of Scale

A concept in economics that describes the cost advantage that arises with increased output of a product, leading to a decrease in the per-unit fixed cost as the scale of production is enlarged.