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If a firm increases the percentage of debt in versus equity in their capital structure,...

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Finance

If a firm increases the percentage of debt in versus equity in their capital structure, which of the following is most likely to be true about the risks to firm's investors?

Select one:

a. Risk to debt holders decreases and risk to equity holders increases.

b. Risk to debt holders increases and risk to equity holders decreases.

c. Risk to debt holders increases and risk to equity holders increases.

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