Which of the Following Statements Is FALSE

question 75

Multiple Choice

Which of the following statements is FALSE?

• A)Holding cash has the opposite effect of leverage on risk and return.
• B)We use the market value of the firm's net debt when computing its WACC and unlevered beta to measure the cost of capital and market risk of the firm's business assets.
• C)Since the WACC does not change with the use of leverage,the value of the firm's free cash flow evaluated using the WACC does not change,and so the enterprise value of the firm does not depend on its financing choices.
• D)Even if the firm's capital structure is more complex,the WACC is calculated by computing the weighted average cost of only the firm's debt and equity.

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Definitions:

Practical Experience

Hands-on or direct involvement in activities or work, gaining knowledge and skills through doing rather than theoretical learning.

Clinical Diagnoses

The process by which healthcare professionals identify diseases or conditions in patients based on a comprehensive evaluation of physical examination findings, medical history, and diagnostic tests.

Historical Data

Information and records about past events, used for reference and analysis to understand patterns, trends, and outcomes in various fields.

Death Certificate

A permanent record of an individual’s death.