Could you explain how higher proportion of debt generally leads to increase in cost of equity and ultimately leads to higher expected rate of return
View the step-by-step solution to:

Question

Could you explain how higher proportion of debt generally leads to increase in cost of equity and ultimately leads

to higher expected rate of return

Top Answer

Debt equity ratio represents proportion between shareholder's equity and debts used to finance assets and operations of the... View the full answer

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question