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ABC Corporation and XYZ Corporation are identical firms in all aspects except for their capital structures (i.e. they have exactly the same assets/business but different
ABC Corporation and XYZ Corporation are identical firms in all aspects except for their capital structures (i.e. they have exactly the same assets/business but different capital structures). ABC is financed by 100% equity. XYZ is financed by 30% debt and 70% equity. The stock of which company has greater systematic risk and is more likely to suffer a greater price decline (or a more negative stock return) during an economic downturn like what we are experiencing now? O A. ABC O B.XYZ O C. No difference
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