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As a Chief Financial Officer increases the use of Debt to drive down the overall WACC, a rational economic investor in the firm's common stock
As a Chief Financial Officer increases the use of Debt to drive down the overall WACC, a rational economic investor in the firm's common stock would view the above as decreased financial risk that would benefit the stability of the firm. decreased business risk that would benefit the stability of the firm. The use of Debt in the capital structure never causes either financial risk or business risk increased financial risk that could represent a higher chance of bankruptcy
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