Question 9 of 28 Assume capital markets are perfect without frictions. Assume all people are risk averse. Which of the following is true? A. Higher leverage will not change the return on equity. B. Higher leverage makes shareholders better off because they can enjoy a higher rate of return. C. Risk of equity increases even if the company has very low leverage ratio and increases leverage by just a little. D. Higher leverage is good for the equity holders up until a point. If leverage is too high, it starts being bad for shareholders. Reset Selection