Char
2023-07-22 23:49Q79, I understand debt increase then leverage increase, but why would increase cost of equity?
所屬：CFA Level I > Corporate Issuers 視頻位置 相關(guān)試題
來源： 視頻位置 相關(guān)試題
1個(gè)回答
Alex助教
2023-07-24 09:37
該回答已被題主采納
你好同學(xué)
According to MM Proposition II
adding leverage to a company’ capital structure increases the risk to equityholders because greater debt increases the probability of bankruptcy. As a result, equityholders will demand a higher return on their equity investment as leverage increases in order to offset the increase in risk.
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追問
能回答我問的問題嗎？ I wanna ask about cost of equity ?
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追答
higher return on their equity investment 說的就是cost of equity
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