Question
What is wrong with the following argument: If a firm issues debt that is risk free, because thereis no possibility of default, the risk of
What is wrong with the following argument: "If a firm issues debt that is risk free, because thereis no possibility of default, the risk of the firm's equity does not change. Therefore, risk-free debtallows the firm to get the benefit of a low cost of capital of debt without raising its cost of capitalof equity"?
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Financial accounting
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel
IFRS Edition
9781119153726, 978-1118285909
