Companies seek the lowest average rate of financing costs

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Reference no: EM13364385

Companies seek the lowest average rate of financing costs to capitalize the business. Common sources of financing are as follows:

- Common stock equity
- Preferred stock equity
- Bond debt

Describe how the following risks may affect these 3 sources of financing and the impact overall on weighted average cost of capital (WACC):

- Default risk

- Inflation

- Interest rate risk

- Stock and market volatility

Reference no: EM13364385

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