What is one potential consequence of an unbalanced capital structure?

An unbalanced capital structure can lead to increased costs of borrowing due to the way it affects a company's perceived risk. When a company has a disproportionate amount of debt compared to equity, it may signal to lenders and investors that the company is more leveraged and potentially at a higher risk of defaulting on its obligations. This heightened risk perception can lead to lenders requiring higher interest rates to compensate for the risk they are taking on. Therefore, a firm with an unbalanced capital structure is likely to face increased costs of borrowing, making it more challenging and expensive to secure funding.

In contrast, while increased market share, higher financial stability, and enhanced customer loyalty are positive outcomes that a company might aspire to achieve, they are not direct consequences of an unbalanced capital structure. Unbalanced structures typically introduce more financial risk, which can undermine stability rather than enhance it. Thus, option C accurately reflects how an unbalanced capital structure can create negative financial implications for a company.