Which of the Following Statements Is Correct

question 114

Multiple Choice

Which of the following statements is correct?

• A) A decrease in the firm's marginal corporate tax rate will decrease the weighted average cost of capital.
• B) Flotation costs can decrease the weighted average cost of capital.
• C) The cost of debt is based on the cost of all liabilities, including accounts payable and accruals.
• D) None of these choices are correct.

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Definitions:

Yield

The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost.

Coupon Rate

An annual interest percentage a bond generates, reflected against its original price.

Monetary Policy

Economic strategy chosen by a government or central bank to control the supply of money, influencing interest rates and overall economic activity.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, bank deposits, and other liquid assets.