A(n)________ in the volatility of assets of the firm benefits ________ at a cost to debt holders.
A)decrease, directors
B)increase, equity holders
C)increase, directors
D)decrease, equity holders

Question

Quizplus · Accepted Answer

An increase in the volatility of assets of the firm benefits equity holders because it increases the potential upside of their investment, while increasing the risk borne by debt holders who have a fixed claim.

A(n)________ in the Volatility of Assets of the Firm Benefits