Which of the following statements is true?
A) When choosing a target capital structure, the goal is to increase the degree of operating leverage.
B) A firm's degree of operating leverage has no impact on how much debt it uses.
C) A firm's decision to use more debt can affect its cost of equity.
D) Total leverage can be calculated by adding the degrees of financial and operating leverage together.
E) All firms in an industry often have similar capital structures.

Question

Quizplus · Accepted Answer

Corporate borrowing increases the risks to shareholders, and leads stockholders to require a higher return.

Which of the Following Statements Is True