An Implicit Cost of Adding Debt to the Capital Structure

question 93

Multiple Choice

An implicit cost of adding debt to the capital structure is that it:

• A) adds interest expense to the operating statement.
• B) increases the required return on equity.
• C) reduces the expected return on assets.
• D) decreases the firm's beta.

---

Definitions:

Talking

The act of verbal communication between individuals to convey information, ideas, or feelings.

Use Humor

The act of leveraging wit or comedy to ease tense situations, build relationships, or simply bring joy to others.

Difficult People

Individuals who are challenging to work with or interact with due to their behaviors, attitudes, or communication styles.

Blocking Others

The act of preventing someone from communicating with you or accessing your information, typically on social media or digital platforms.