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What's The Relationship Between Debt And Cost Of Equity? |
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Answer» More debt means that the company is more risky, so the company's Levered Beta will be higher - all ELSE being equal, ADDITIONAL debt would raise the Cost of Equity, and less debt would lower the Cost of Equity. More debt means that the company is more risky, so the company's Levered Beta will be higher - all else being equal, additional debt would raise the Cost of Equity, and less debt would lower the Cost of Equity. |
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