The riskiness of highly leveraged transactions declines overtime due to which of the following factors?
A) Debt reduction assuming nothing else changes
B) Increasing discount rates
C) A rising unlevered beta
D) An unchanging cost of equity
E) An unchanging weighted average cost of capital

Question

Quizplus · Accepted Answer

As debt is gradually reduced over time through principal payments, the leverage of the transaction decreases, which in turn reduces the overall riskiness of the transaction.

The Riskiness of Highly Leveraged Transactions Declines Overtime Due to Which