As the Debt-Equity Ratio Decreases When Debt Is Not Risk

question 35

Multiple Choice

As the debt-equity ratio decreases when debt is not risk free:

• A) debtholders demand a higher expected return.
• B) debtholders demand a lower expected return.
• C) the expected return on equity increases.
• D)the expected return on assets increases.

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Definitions:

Nonverbal Communication

Interaction that occurs without words, utilizing methods such as physical gestures and facial expressions to express feelings and convey messages.

Attitudes

Attitudes are settled ways of thinking or feeling about something, typically reflected in a person's behavior.

Emotions

Complex psychological states involving subjective feelings, physiological arousal, and expressive behaviors.

Unconsciously

Performing actions or having thoughts and feelings without being aware of them.