Based on your answer to this question, do you think equity investors will require higher or lower returns for their investments than debt investors, all other matters being equal?

Yes, equity investors should be more concerned about the risk of bankruptcy more than debt investors because debt investors have the priority in claim on the firm's assets, when a bankruptcy occurs. But equity investors are paid only after the requirements of debt investors are met in times of firm's bankruptcy.

bankruptcy risk is the risk involved when the company is not able to meet its debt obligations. If the company is unable to meet its debt obligations such as interest and principal payment of the debts taken, the firm will face bankruptcy risk. Usually, equity holders are paid after the payments to creditors of the firm are met.so if the firm is unable to meet its creditors requirements, then the firm will not be able to meet its payments to investors. Debt investor's risk is secured with company's assets, and so in the event of bankruptcy debt investors carry less risk as they have the claim on company's assets if anything goes wrong. But equity investors do not have any such claims and so they carry more risk than debt investors in terms of bankruptcy.