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

Question

Quizplus · Accepted Answer

This statement is false. As the amount of debt rises, the company's financial risk increases, which typically results in a higher required rate of return for shareholders. This is because shareholders are taking on more risk by investing in a company that has a higher debt load.

In Most Instances,as the Amount of Debt Rises,the Ordinary Shareholders