When Firms Issue More Debt, the Tax Shield on Debt

question 13

Multiple Choice

When firms issue more debt, the tax shield on debt ____, the agency costs on debt (i.e., costs of financial distress) ____, and the agency costs on equity ____.

• A) increases; increases; increases
• B) decreases; decreases; decreases
• C) increases; increases; decreases
• D) decreases; decreases; increases
• E) increases; decreases; decreases

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Definitions:

Host Genome

The complete set of DNA, including all of its genes, within an organism or cell.

Emerging Disease

A disease that was previously unknown or has recently begun spreading to a new region.

Range

The difference between the highest and lowest values in a set of numbers, or the extent of variation.

Detected

Discovered or found out through careful observation, investigation, or the use of specialized equipment.