There Are Two Costs of Debt Finance

question 80

True/False

There are two costs of debt finance.The explicit cost of debt is the rate of interest that bondholders demand.But there is also an implicit cost,because overborrowing increases the required rate of return to equity.

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Definitions:

Unconscious

The part of the mind that contains thoughts, memories, and desires that are not presently in conscious awareness but can influence behavior and decisions.

Sleep Deprivation

The condition of not having enough sleep, which can affect cognitive functions, emotional well-being, and physical health.

Suprachiasmatic Nucleus

A region of the brain located in the hypothalamus, responsible for controlling circadian rhythms.

Core Neurons

Essential nerve cells in the brain and spinal cord that play critical roles in the processing and transmitting of neural signals.