Consider a firm with a debt to value ratio of 0.6 and a tax rate of of 25%. the current debt level is consider by many to be risk-free. the firm is currently reducing uts debt to value ratio to 0.4 in order to be able to pay its debt with more confidence. if the the firm announces its plan then,

I. the stock price should increase

II. cost of equity should decrease

III. the cost of debt should decrease

options:

a. Only I

b. only II

c. only III

d. only I and II

e. all alternatives are correct

Question 1 0.667 points Consider a firm with a totoof and a rate of the current de cor by many to be the misconcert to pay its debt with more confidence the announces its punten The stock price should increase The cost of equity should decrease The cost of debt should decrease Only Oly Only Only and All the alternatives are correct Question of 12