A corporation has concluded that its financial risk premium is ...

[jayhills49]

A corporation has concluded that its financial risk premium is too high. In order to decrease this, the firm can ________.
 
  A) increase the proportion of long-term debt to decrease the cost of capital
  B) increase the proportion of short-term debt to decrease the cost of capital
  C) decrease the proportion of common stock equity to decrease financial risk
  D) increase the proportion of common stock equity to decrease financial risk

Question 2

The cost of retained earnings is ________.
 
  A) less than the cost of debt
  B) equal to the cost of a new issue of common stock
  C) equal to the cost of common stock equity
  D) irrelevant to the investment/financing decision

[firehawk60]

Answer to Question 1

D

Answer to Question 2

C

[jayhills49]

Excellent

[xthemafja]

TYSM