Debt Financing Is Made Up of Explicit and Implicit Costs

question 59

Multiple Choice

Debt financing is made up of explicit and implicit costs which are:

• A)A higher required ROE and the interest rate bondholders demand, respectively
• B)The interest rate bondholder's demand and a higher required ROE, respectively
• C)The costs of equity and debt, respectively
• D)The costs of issuing bonds and the interest rate bondholders demand, respectively

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