A firm increases the proportion of debt in its capital structure by issuing bonds and repurchasing shares with the funds raised. Which statement is the most correct?

a.

Compared to the previous capital structure, shareholders will receive a larger share of liquidated assets than lenders if the company winds up.

b.

The required return on equity will decrease.

c.

The firm is buying debt.

d.

The increased interest expense will lead to a higher tax payable.

e.

This will amplify the return on equity.