Which of the Following Statements Is CORRECT

question 20

Multiple Choice

Which of the following statements is CORRECT?

• A) Since debt financing raises the firm's financial risk,increasing the target debt ratio will always increase the 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 costs 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 costs of both debt and equity financing.However,this action still may lower the company's WACC.
• E) Since a firm's beta coefficient is not affected by its use of financial leverage,leverage does not affect the cost of equity.

Identify the most commonly used and researched personality tests.

Recognize the theoretical underpinnings of personality assessments and their critics.

Distinguish between structured and unstructured interviews in personality assessment.

Understand the purpose and methodology behind the Thematic Apperception Test (TAT) and Rorschach inkblot test.

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Definitions:

Variable Costs

Costs that change in proportion to the level of goods or services that a business produces.

High-Low Method

The high-low method is a way of estimating the variable and fixed costs of a business by analyzing the highest and lowest levels of activity and their corresponding costs.

Machine Maintenance

The routine or preventive care given to machinery and equipment to keep them running efficiently and to avoid any unplanned downtime or failures.

Mixed Cost

A cost composed both of variable and fixed elements, where part of the expense varies with the level of output while the rest remains constant.