If a firm goes from zero debt to successively higher levels of debt, why would you expectits stock price to rise first, then hit a peak, and then begin to decline?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter16: Capital Structure Decisions
Section: Chapter Questions
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If a firm goes from zero debt to successively higher levels of debt, why would you expect
its stock price to rise first, then hit a peak, and then begin to decline?

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