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.

---

Definitions:

Prime Working Age

Individuals who are in the age group considered to be in their most productive years, typically between 25 and 54 years old.

Labor-Force Participation Rates

The percentage of the adult population that is either employed or actively seeking employment.

Unemployment Rate

The level of unemployment within the labor force among those who are vigorously searching for jobs.

Economy

The system or range of economic activities in a particular area, involving the production, distribution, and consumption of goods and services.