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QUESTION 7 Which of the following statements is false? The systematic risk of the firm's equity has two parts: business risk and financial risk. The

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QUESTION 7 Which of the following statements is false? The systematic risk of the firm's equity has two parts: business risk and financial risk. The interest tax shield is risk-free. Financial risk is derived from the event that bondholders will assume control of the firm in the event of default. Most firms in the United States maintain relatively low debt/equity ratios. Financial distress costs decrease the attractiveness of debt financing, all else the same

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