The correct answer is c. riskier; safer.
Here's the reasoning:
- It is generally riskier for a company to issue equity than debt because equity does not require regular interest payments and generally dilutes ownership, but it may be seen as less risky from the company's perspective if they expect growth.
- For an investor, buying equity in a company is riskier than buying debt since equity holders are lower in the capital structure than debt holders and have less claim on the company's assets in the event of liquidation. However, equity also has the potential for higher returns. Therefore, it is considered safer for an investor to buy debt compared to equity in the same firm.
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