Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. evaluate: "if a firm issues risk-free debt, becaus

Evaluate: "If a firm issues risk-free debt, because there is no default risk, the risk...

50.1K

Verified Solution

Question

Finance

image

Evaluate: "If a firm issues risk-free debt, because there is no default risk, the risk of the firm's equity does not change. As such, risk-free debt allows the firm to benefit from low cost debt without raising its cost of equity." (Select the best choice below.) O A. The statement is correct because since debt is cheaper than equity, then a firm can reduce its overall COC by increasing the amount of debt financing. O B. The statement is correct. O C. The statementt is wrong because any leverage raises the equity cost of capital. Risk-free leverage raises it the most because it does not share any of the risk. OD. The statement is wrong because any leverage raises the equity cost of capital. Risk-free leverage raises it the least because it does not share any of the risk

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Match the description of each study with the scientific question being used. Use each once, not...

Psychology
Q

Which structure of the leaf allows the plant to evaporate water thus cooling the plant...

Biology
Q

Two pendulums of time periods 3s and 7s start oscillating from two opposite extreme positions...

Physics
Q

A building that is 152 feet tall casts a shadow that is 75 feet. A...

Geometry
Q

The following table shows the daily cost data and demand schedule for a typical firm...

Basic Math
Q

A passenger's tram ride to go up to Sandia Peak begins at an elevation of...

Basic Math
Q

Hal and Renee play the following game. A bag has 14 tiles in it, each...

Statistics
Q

A rental car company charges $35 plus 40 cents per each mile driven.Part1. Which of...

Algebra
Q

Use the Associative Property of Multiplication to evaluate the following expression 1 14 9 9...

Algebra
Q

Company M produces three different types of products, product A, product B and product C_{1}...

Finance
Q

(5) Fred is the sole shareholder of an S corporation in Fort Deposit, Alabama. At...

Accounting
Q

who belongs of cost and eastched would be a candled as mind and Soraymin warene

Accounting