Which One of the Following Is a Correct Statement Concerning

question 94

Multiple Choice

Which one of the following is a correct statement concerning the weighted average cost of capital?

• A) Preferred stock is generally the cheapest form of external financing.
• B) An increase in interest rates by the Bank of Canada generally has no effect on a firm's cost of capital.
• C) The use of debt generally lowers a firm's cost of capital, at least initially.
• D) Taxes help lower the cost of debt and preferred stock financing.
• E) The weighted average cost of capital remains constant for a firm over time.

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Definitions:

Standard Deviation

A statistical metric that quantifies the spread or dispersion of a dataset relative to its mean, showcasing variability.

Annual Snowfall

The total amount of snow that falls within a specific geographic area over the course of a year.

Mean

The average of a data set, found by adding all the numbers together and dividing by the quantity of numbers.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, indicating how much the individual values differ from the mean of the values.