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    Question

    Capital structure of a firm influences

    the:
    A Risk Correct Answer Incorrect Answer
    B Return Correct Answer Incorrect Answer
    C Both Risk and Return Correct Answer Incorrect Answer
    D Return but not Risk Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    The capital structure of a firm refers to the way it finances its operations through a combination of debt and equity. This mix of financing sources can affect both the risk and return profile of the firm.

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