Changing the Capital Structure by Adding Debt Will

question 55

Multiple Choice

Changing the capital structure by adding debt will:

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

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Definitions:

Unconscious Conflict

Psychological struggles within the unconscious mind, often stemming from repressed thoughts or feelings, that can influence behavior and emotions.

Id

In psychoanalytic theory, the part of the human personality that is driven by innate instinctual impulses and primary processes.

Superego

In psychoanalytic theory, the part of the personality that represents internalized ideals and provides standards for judgment and future aspirations.

Humanistic Psychologists

Psychologists who focus on the individual's potential for personal growth and the importance of self-perception in understanding behavior.