Which of the Following Statements Is CORRECT

question 25

Multiple Choice

Which of the following statements is CORRECT?

• A)Since debt financing raises the firm's financial risk, increasing a company's debt ratio will always increase its WACC.
• B)Since debt financing is cheaper than equity financing, raising a company's debt ratio will always reduce its WACC.
• C)Increasing a company's debt ratio will typically reduce the marginal cost of both debt and equity financing.However, this action still may raise the company's WACC.
• D)Increasing a company's debt ratio will typically increase the marginal cost of both debt and equity financing.However, this action still may lower the company's WACC.
• E)Since a firm's beta coefficient it not affected by its use of financial leverage, leverage does not affect the cost of equity.

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Definitions:

Preauthorization

Prior approval of insurance coverage and necessity of procedure; refers to obtaining plan approval for services prior to the patient receiving them; relates not only to whether the services are covered but also whether the proposed treatment is medically necessary.

Medically Necessary

A term used to describe treatments, services, or supplies needed to diagnose or treat a medical condition, determined by healthcare providers.

Indemnity-Type Insurance

A form of insurance where the insurer compensates the insured for losses in exchange for premiums paid, without providing the service directly.

Referral for Patient Care

The process by which a healthcare provider sends a patient to another specialist or service for further examination or treatment.