Which of the Following Statements Is FALSE

question 36

Multiple Choice

Which of the following statements is FALSE?

• A)With no debt,the WACC is equal to the unlevered equity cost of capital.
• B)With perfect capital markets,a firm's WACC is dependent on its capital structure and is equal to its equity cost of capital only if the firm is levered.
• C)As the firm borrows at the low cost of capital for debt,its equity cost of capital rises,but the net effect is that the firm's WACC is unchanged.
• D)Although debt has a lower cost of capital than equity,leverage does not lower a firm's WACC.

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Definitions:

Psychosexual Development

A Freudian concept describing how personality develops through stages centered on erogenous zones.

Oedipus Complex

A phase in Freudian psychology where a child feels desire for the parent of the opposite sex and jealousy toward the parent of the same sex.

Sexual Attachment

Describes the emotional bond that develops between sexual partners, often influencing relationship dynamics and stability.

Jealousy

An emotion that arises from perceived threats to a relationship or social status, leading to feelings of insecurity or fear of loss.