Companies that have higher risk than a competitor in the same industry will generally have
A) to pay a higher interest rate than its competitors.
B) a lower relative stock price than its competitors.
C) a higher cost of funds than its competitors.
D) all of these.

Question

Quizplus · Accepted Answer

Companies with higher risk than their competitors will have to pay a higher interest rate for borrowing funds, which results in a higher cost of funds. This, in turn, leads to a lower relative stock price compared to its competitors, as investors view the company as more risky. Therefore, all of the given choices are correct.

Companies That Have Higher Risk Than a Competitor in the Same