When capital can be used as a signal of project quality, a good borrower is charged a low-interest rate. The reason that a high-risk borrower is unwilling to put up more equity despite this low rate is...
a. the high-risk borrower can lose most of its capital when a low rate is charged
b. none of these
c. low rate induces the high-risk borrower to take on less risky project
d. the high-risk borrower is more interested in getting a debt tax shield and, therefore, would like as large a loan as possible
