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Social Science Clinic => Business => Finance => Topic started by: jenniferbaugh1984 on Aug 7, 2023

Title: Bankruptcy risk produces an ambiguous effect on agency costs, since debt can reduce one aspect of ...
Post by: jenniferbaugh1984 on Aug 7, 2023

Question 1

Although they operate in different industries, two firms have the same expected earnings per share and the same standard deviation of expected EPS. Thus, the two firms must have the same business risk.

◦ true
◦ false

Question 2

Bankruptcy risk produces an ambiguous effect on agency costs, since debt can reduce one aspect of agency costs (wasteful spending) but may increase another (underinvestment).

◦ true
◦ false

Title: Bankruptcy risk produces an ambiguous effect on agency costs, since debt can reduce one aspect of ...
Post by: Afvelasquez on Aug 7, 2023

Answer 1

false

Answer 2

true