Adjusting Interest Rates, Fees, and Other Terms Upward for Increasing

question 34

True/False

Adjusting interest rates, fees, and other terms upward for increasing amounts of default risk is a way to attempt to realize the expected return on the loan.

Understand the mechanics of homemade leverage and its implications on investors' positions.

Describe the relationship between capital structure, cost of capital, and firm valuation according to Modigliani and Miller propositions with tax.

Identify the costs associated with corporate default, including direct and indirect bankruptcy costs.

Understand the principles for choosing an optimal capital structure that balances tax benefits, financial distress costs, and investment policy considerations.