Although Debt Financing Is Usually the Cheapest Component of Capital

question 75

Multiple Choice

Although debt financing is usually the cheapest component of capital, it cannot be used in excess because

• A) interest rates may change.
• B) the firm's stock price will increase and raise the cost of equity financing.
• C) the financial risk of the firm may increase and thus drive up the cost of all sources of financing.
• D) underwriting costs may change.

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Definitions:

Positive Psychology

A branch of psychology focused on the study of human strengths, virtues, and factors that contribute to a fulfilling life.

Character Strengths

Positive traits reflected in thoughts, feelings, and behaviors, such as courage, kindness, and wisdom, that contribute to a fulfilling life.

Aerobic Exercise

Physical exercise of low to high intensity that depends primarily on the aerobic energy-generating process.

Mindfulness Meditation

A form of meditation focusing on being intensely aware of what you're sensing and feeling in the moment, without interpretation or judgment.