Which of the Following Changes Would Tend to Increase the Company

question 19

Multiple Choice

Which of the following changes would tend to increase the company cost of capital for a traditional firm?

• A)decrease the proportion of equity financing.
• B)increase the market value of the debt.
• C)decrease the proportion of debt financing.
• D)Decrease the market value of the equity.

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Definitions:

Dollar Worth

The value of the United States dollar in terms of goods, services, or other currencies.

Legal Obligation

A duty enforceable by law, requiring a person or organization to perform or refrain from performing a certain action.

Basic Necessities

Essential items and services required for individuals to maintain an adequate standard of living, such as food, shelter, and healthcare.

John Rawls

An American political philosopher known for his theory of justice as fairness, which includes principles of liberty and equality that govern the basic structure of society.