Which of the following is true of leverage on risk of a project?
A) Increasing the firm's debt decreases the beta per unit of equity investment.
B) Risk per unit of equity investment will increase non-linearly in the D/E ratio if the debt is risk free.
C) Risk per unit of equity investment will decrease non-linearly in the D/E ratio if the debt is risk free.
D) Reducing equity increases the risk per unit of equity investment.
Correct Answer:
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