The lower risk nature of long-term debt in a firm's capital structure is due to the fact that

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The lower risk nature of long-term debt in a firm's capital structure is due to the fact that creditors have a higher position in the priority of claims. This means that in the case of bankruptcy or liquidation, creditors will be paid before equity holders. Therefore, the risk associated with long-term debt is lower compared to equity as the chances of losing invested capital are lower.

The Lower Risk Nature of Long-Term Debt in a Firm's