Indicate whether you agree or disagree with the statement and provide a short rationale to support your decision.
1. As a firm increases the percentage of debt financing used, the component cost of equity capital increases. Agree or disagree, and why.
2. One significant risk associated with hedging interest rate risk in swap agreement is counterparty risk. Agree or disagree, and why.
3. There is more risk associated with foreign investment in a floating exchange rate environment (compared to fixed rates). Agree or disagree, and why