All of the following are true EXCEPT: a. The claims of preferred stockholders on

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All of the following are true EXCEPT: a. The claims of preferred stockholders on the firm's earnings are junior to those of debt- holders. b. The risk of recapitalization increases a firm's required rate of return. c. Long-term state government securities are always less risky than corporate long-term securities of the same maturity. d. The cost of capital to the firm is equal to the equilibrium rate of return demanded by investors in the capital markets for securities with that degree of risk All of the following are true EXCEPT: All of the following are true EXCEPT: a. The claims of preferred stockholders on the firm's earnings are junior to those of debt- holders. b. The risk of recapitalization increases a firm's required rate of return. c. Long-term state government securities are always less risky than corporate long-term securities of the same maturity. d. The cost of capital to the firm is equal to the equilibrium rate of return demanded by investors in the capital markets for securities with that degree of risk a. The claims of preferred stockholders on the firm's earnings are junior to those of debt- holders. b. The risk of recapitalization increases a firm's required rate of return. c. Long-term state government securities are always less risky than corporate long-term securities of the same maturity. d. The cost of capital to the firm is equal to the equilibrium rate of return demanded by investors in the capital markets for securities with that degree of risk

Explanation / Answer

a

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