Changing the Capital Structure by Adding Debt Will Not

question 101

Multiple Choice

Changing the capital structure by adding debt will not:

• A)increase the return that shareholders require.
• B)leave the WACC unaffected.
• C)decrease debt holder risk.
• D)increase the cost of debt.

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Definitions:

Response Rate

The frequency or rate at which a specific behavior or action is performed, often measured in psychological experiments or surveys.

Stimulus Generalization

The psychological phenomenon where a response learned from one stimulus is elicited by similar, but distinct, stimuli.

Primary Reinforcers

Stimuli that are inherently rewarding and satisfy basic biological needs, such as food, water, and warmth, leading to the conditioning of behavior without prior learning.

Secondary Reinforcers

Stimuli or rewards that have learned value through their association with primary reinforcers, such as money or praise.