The common stock of a company must provide a higher expected return than the debt of the same company because | Faculties

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Priyanka Tomar

🎓 Tutor III ⭐ 35.28K Points

📊 Financial Management

Q. The common stock of a company must provide a higher expected return than the debt of the same company because

(A) there is less demand for stock than for bonds.
(B) there is greater demand for stock than for bonds.
(C) there is more systematic risk involved for the common stock.
(D) there is a market premium required for bonds.

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✅ Correct Answer: (C) there is more systematic risk involved for the common stock.

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