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

question 54

Multiple Choice

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

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

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Definitions:

Retina

The light-sensitive layer of tissue at the back of the inner eye, which converts light images into neural signals sent to the brain.

Fovea

A small depression in the retina where visual acuity is highest due to the concentration of cones.

Optic Disk

The point in the eye where the optic nerve fibers exit the retina, often referred to as the blind spot because it lacks photoreceptors.

Ganglion Cells

Neurons whose axons form the optic nerve.