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Evaluate: "If a firm issues risk-free debt, because there is no default risk, the risk...

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Evaluate: "If a firm issues risk-free debt, because there is no default risk, the risk of the firm's equity does not change. As such, risk-free debt allows the firm to benefit from low cost debt without raising its cost of equity." (Select the best choice below.) O A. The statement is correct because since debt is cheaper than equity, then a firm can reduce its overall COC by increasing the amount of debt financing. O B. The statement is correct. O C. The statementt is wrong because any leverage raises the equity cost of capital. Risk-free leverage raises it the most because it does not share any of the risk. OD. The statement is wrong because any leverage raises the equity cost of capital. Risk-free leverage raises it the least because it does not share any of the risk

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