Which of the Following Statements Is CORRECT

question 64

Multiple Choice

Which of the following statements is CORRECT?

• A)When a company increases its debt ratio, the costs of equity and debt both increase.Therefore, the WACC must also increase.
• B)The capital structure that maximizes the stock price is generally the capital structure that also maximizes earnings per share.
• C)All else equal, an increase in the corporate tax rate would tend to encourage a company to increase its debt ratio.
• D)Since debt financing raises the firm's financial risk, increasing a company's debt ratio will always increase its WACC.
• E)Since debt is cheaper than equity, increasing a company's debt ratio will always reduce its WACC.

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Definitions:

Chromosome 7

One of the 23 pairs of chromosomes in humans, which carries genes associated with a variety of conditions and traits, including cystic fibrosis.

Homozygous

Refers to a chromosome pair that bears identical alleles for a single gene.

Cystic Fibrosis

A genetic disorder affecting the lungs and digestive system, characterized by mucus buildup and respiratory infections.

Indigenous Groups

Ethnic groups that were the original inhabitants of a given region, maintaining traditions that distinguish them from the dominant groups of the region.