Business Studies · Cost of Capital
The cost of equity is generally higher than the cost of debt primarily because:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Equity shares carry a higher financial risk for investors than debt instruments✓
- 2The face value of equity shares is always lower than debentures
- 3Equity shares pay a legally fixed dividend rate
- 4Equity shares are highly liquid and easily marketable
Correct answer
Equity shares carry a higher financial risk for investors than debt instruments
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