As long as the firm issues no new debt,changes in interest rates will have no effect on the cost of capital.

Question

Quizplus · Accepted Answer

Changes in interest rates can affect the cost of capital even if the firm issues no new debt. The cost of equity can be influenced by changes in interest rates, as they can impact the required rate of return that investors demand for holding equity. Additionally, changes in interest rates can affect the overall market and economic conditions, which may influence the cost of capital for the firm.

As Long as the Firm Issues No New Debt,changes in Interest