As Debt Is Substituted for Equity in the Capital Structure

question 139

Multiple Choice

As debt is substituted for equity in the capital structure and the debt ratio increases, the behavior of the overall cost of capital is partially explained by ________.

• A) the tax-deductibility of interest payments
• B) the increase in the number of common shares outstanding
• C) the reduction in risk as perceived by the common shareholders
• D) the decrease in the cost of equity

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Definitions:

Methodological Concerns

Issues or challenges related to the method or process used in research or investigation.

Sampling Techniques

Statistical methods used to select a portion of a population for study, aiming to accurately reflect the larger group from which the sample is drawn.

Familismo

Emphasis on family among Hispanics/Latinos.

Sexual Practices

Behaviors and activities that individuals engage in to express their sexuality or sexual desires.