Which of the Following Should Be Expected to Occur When

question 15

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:

SWOT Analysis

An instrument for planning strategies that detects the Strengths, Weaknesses, Opportunities, and Threats involved in business competition or the planning of a project.

External Analysis

The process of evaluating an organization's external environment to identify opportunities and threats that could impact its strategy and operations.

Environmental Scanning

The process businesses use to understand the external factors influencing their operation, including technological, regulatory, and competitive elements.

Internal Factors

Elements or conditions within an organization or individual's control that can influence decisions, behaviors, and outcomes, such as policies, resources, and personal abilities.