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You own stock in the Gentry Company, and you read in the financial press that a recent bond offering has raised the firm's debt/equity ratio from 35 percent to 55 percent. Discuss the effect of this change on the variability of the firm's net income stream, other factors being constant. Discuss how the change would affect your required rate of return on the common stock of the Gentry Company.

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Category:- Basic Finance
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