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Katherine Epler, a self-employed corporate finance consultant, is preparing a new seminar concerning debt ratings and how they impact capital structure policy. As she is working on her presentation, Epler prepares two presentation slides that contain the following:
Slide 1: Lower debt ratings will increase the cost of debt as well as the cost of equity financing.
Slide 2: Managers would prefer to have the highest possible debt ratings.
With respect to Epler’s slides: A. both are correct. B. both are incorrect. C. only one is correct. |