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    Corporate Finance Study Set 2
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    Exam 16: Debt Policy
  5. Question
    An Implicit Cost of Adding Debt to the Capital Structure
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An Implicit Cost of Adding Debt to the Capital Structure

Question 3

Question 3

Multiple Choice

An implicit cost of adding debt to the capital structure is that it:


A) Adds interest expense to the operating statement
B) Increases the required return on equity
C) Reduces the expected return on assets
D) Decreases the firm's beta

Correct Answer:

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