If a Company Increases the Proportion of Debt in a Firm's

question 19

Multiple Choice

If a company increases the proportion of debt in a firm's capital structure, then:

• A)the increased debt is not covered by the tax shield.
• B)holders of common shares will expect a higher rate of return
• C)the company's equity beta will decrease
• D)the firm's WACC remains unchanged.

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Definitions:

Reinforce Themselves

The process whereby actions or behaviors are naturally strengthened or encouraged without external intervention.

Self-regulation

The ability to monitor and control one's own behavior, emotions, or thoughts, adjusting them in accordance with demands and goals.

Discrepancy

A lack of compatibility or similarity between two or more facts, figures, or perspectives.

Higher Goals

These are ambitious objectives that go beyond immediate or basic needs, focusing on larger, aspirational targets.