Which of the Following Statements Is FALSE

question 67

Multiple Choice

Which of the following statements is FALSE?

• A) 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.
• B) Holding cash has the opposite effect of leverage on risk and return.
• C) 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.
• D) We use the market value of the firms' net debt when computing its WACC and unlevered beta to measure the cost of capital and market risk of the firm's business assets.

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Definitions:

Identity Theft

Consists of stealing someone’s personal information (e.g., Social Security number, bank account, credit card number) and using it without their permission, usually to obtain money or goods.

Antisocial Behaviors

Behaviors that are harmful or lack consideration for the well-being of others, often violating social norms or laws.

Injunctive Norm

Social norms that are perceived as what is approved or disapproved of by others, guiding behavior by the expectations of others.

Humiliation

The feeling of shame, embarrassment, or loss of dignity caused by an act that lowers one's status in the eyes of others.