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The chapter on financial leverage, as well as the discussion in class, used risk units to illustrate what about financial leverage? a. That debt financing

The chapter on financial leverage, as well as the discussion in class, used risk units to illustrate what about financial leverage?

a.

That debt financing creates a tax shield and therefore lowers firm risk

b.

That for firms with leverage, the higher the EBIT, the higher is firm risk

c.

That the risk of the firms assets cannot be changed by shifts in financial leverage

d.

That debt is risk free

e.

That firm value is maximized where the cost of capital is minimized

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