Changing the Capital Structure by Adding Debt Will Not

question 33

Multiple Choice

Changing the capital structure by adding debt will not:

• A) increase the return that shareholders require.
• B) increase default risk.
• C) decrease debtholder risk.
• D)increase the cost of debt.

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Definitions:

Subsidization

The provision of financial assistance or support by a government or organization to lower the cost of services or commodities.

Globalization

The process of interaction and integration among people, companies, and governments worldwide, often leading to increased connectivity and trade.

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