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प्रश्न
How does cost of equity affect the choice of capital structure of a company? Explain
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उत्तर
The cost of equity depicts the financial risk faced by the company. If the financial risk is higher, then the shareholders expect a higher return. This, in turn, implies a rise in the cost of equity. However, if the cost of equity is high, then it would be difficult for the company to opt for more equity.
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