If investors' aversion to risk rose, causing the slope of the sml to increase, this would have a greater impact on the required rate of return on equity, rs, than on the interest rate on long-term debt, rd, for most firms. other things held constant, this would lead to an increase in the use of debt and a decrease in the use of equity. however, other things would not stay constant if firms used a lot more debt, as that would increase the riskiness of both debt and equity and thus limit the shift toward debt.

Google started as one of many internet search engines, amazon started as an online book seller, and ebay began as a site where people could sell used personal items in auctions. these firms have grown to be so large and dominant that they are facing antitrust scrutiny from competition regulators in the us and elsewhere. did these online giants grow by fairly beating competition, or did they use unfair advantages? are there any clouds on the horizon for these firms -- could they face diseconomies of scale or diseconomies of scope as they continue to grow? if so, what factors may limit their continued growth?