The 'Traditional View' of Capital Structure Argues That

Multiple Choice

The 'traditional view' of capital structure argues that:

A) a company's overall cost of capital can be reduced by financial leverage provided that the degree of leverage is not too great.
B) the cost of capital is unaltered by using 'cheaper debt'.
C) a company's cost of capital increases as more debt is used in its capital structure.
D) a firm's value is independent of its capital structure.