In most instances, as the amount of debt rises, the common stockholders will decrease their required rate of return.

Name: In most instances, as the amount of debt rises, the common stockholders will decrease their required rate of return.
Brand: Quizplus
Rating: 4.9 (49 reviews)

Question

Quizplus · Accepted Answer

As the amount of debt rises, the risk to the common stockholders also increases. Hence, they would require a higher rate of return to compensate for the increased risk, not a decrease.

In Most Instances, as the Amount of Debt Rises, the Common