When considering a firm's capital structure,a financial manager must:
A) make sure that business conditions are good when changing the level of debt.
B) balance the benefits of increased expected returns with increased financial risk.
C) be extra cautious during periods when the rate of return on assets is greater than the interest rate on debt.
D) seek to reduce debt at all costs.
Correct Answer:
Verified
Q10: The chance that a borrower will fail
Q11: If a company is financed entirely by
Q12: Financial leverage exposes shareholders to financial risk
Q13: Under the MM theorem,capital structure will not
Q14: A company with low financial leverage,large reserve
Q16: MM Proposition I states that:
A)the value of
Q17: Financial risk comes about when:
A)new competitors emerge.
B)new
Q18: MM Proposition II is based on the:
A)law
Q19: Which of the following is true of
Q20: Arbitrage refers to:
A)the ability to make a
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