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3. In a world with no taxes, no transaction costs, and no costs of financial distress, are the following statements true, false, or uncertain? Explain

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3. In a world with no taxes, no transaction costs, and no costs of financial distress, are the following statements true, false, or uncertain? Explain your answers. (a) If a firm issues equity to repurchase some of its debt, the price per share of 1 the firm's stock will rise because the shares are less risky. (b) Moderate borrowing will not increase the required return on a firm's equity

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