16.3 Business risk is unaffected by capital structure. As the financing mix changes, whatever equity is outstanding

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16.3 Business risk is unaffected by capital structure. As the financing mix changes, whatever equity is outstanding must absorb the fixed business risk of the firm. The less equity, the more risk absorbed per share. Therefore, as capital structure changes, assets is held fixed while requity adjusts.

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Fundamentals Of Corporate Finance

ISBN: 9780073382302

6th Edition

Authors: Richard A Brealey, Stewart C Myers, Alan J Marcus

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