What Will Happen to the Required Return on Assets as a Result

question 104

Multiple Choice

What will happen to the required return on assets as a result of changing to a more debt-intensive capital structure?

• A)it will decrease.
• B)it will increase.
• C)it will remain unchanged although individual investor requirements will shift.
• D)the required rates of return for assets, debt holders, and equity holders will all remain constant.

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Definitions:

Selling Price

The amount of money for which a product or service is sold to the customer.

True Value

The actual, intrinsic value of an asset or entity, not influenced by external factors like market fluctuations or subjective perceptions.

Bid-Rigging

An illegal agreement among competitors to raise, lower, or maintain prices at agreed-upon levels, often in auctions.

Larger Amounts

Quantities or volumes greater than usual or compared to a standard measure, indicating a significant scale.