Which of the Following Statements Is CORRECT

question 4

Multiple Choice

Which of the following statements is CORRECT?

• A) There is no reason to think that changes in the personal tax rate would affect firms' capital structure decisions.
• B) A firm with high business risk is more likely to increase its use of financial leverage than a firm with low business risk, assuming all else equal.
• C) If a firm's after-tax cost of equity exceeds its after-tax cost of debt, it can always reduce its WACC by increasing its use of debt.
• D) Suppose a firm has less than its optimal amount of debt.Increasing its use of debt to the point where it is at its optimal capital structure will decrease the costs of both debt and equity financing.
• E) In general, a firm with low operating leverage also has a small proportion of its total costs in the form of fixed costs.

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Definitions:

Hysterectomy

A surgical procedure that involves removing the uterus and sometimes other reproductive organs.

Uterine Cancer

A type of cancer that begins in the uterus, the part of a woman's body where fetal development occurs.

Hydrocodone And Acetaminophen

A combination medication used for pain relief, where hydrocodone is an opioid pain reliever and acetaminophen is a non-opioid pain reliever.

Postsurgical Pain

Pain experienced after undergoing surgery, often a normal part of the healing process but sometimes indicating complications.