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a.) If a change in capital structure (debt-equity mix) for a company increases the risk of both the firms equity and debt, does it imply

a.) If a change in capital structure (debt-equity mix) for a company increases the risk of both the firms equity and debt, does it imply that the entire firms risk has increased? Assume we are in a perfect market.

b.) In a world of perfect financial markets, is the cost of capital of the firm independent of how it is financed (i.e. the debt-equity mix)?

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