Debt financing is more risky for firms than preferred stock financing because
A) preferred dividend payments are legal obligations
B) interest payments are legal obligations
C) preferred stock must be retired
D) debt need not be refinanced
Correct Answer:
Verified
Q24: If the dividend growth model is used,
Q25: As a firm increases its use of
Q26: Retained earnings
A) have no cost
B) are the
Q27: The effective cost of debt is reduced
Q28: The effective cost of debt depends on
1)
Q30: The optimal capital structure involves
A) maximizing the
Q31: The marginal cost of capital rises
1) because
Q32: If equity is negative,
A) debt exceeds total
Q33: In order to maximize the value of
Q34: The average cost of capital is the
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