Which of the Following Should Be Expected to Occur When

question 80

Multiple Choice

Which of the following should be expected to occur when a firm significantly increases its proportion of debt financing?

• A)the required return on debt will decrease.
• B)the required return on equity will decrease.
• C)the company cost of capital will increase.
• D)the company cost of capital will remain unchanged.

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Definitions:

Quantitatively

Pertaining to the measurement or assessment of quantities or amounts, often involving numerical data and statistical methods.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, often used as an indicator of inflation.

Market Basket

A selected set of goods and services used to track changes in prices, often for the purpose of measuring inflation or the cost of living.

Pay Equity

The principle of compensating employees equally for jobs of equal value regardless of gender, ethnicity, or other non-performance-related factors.