If a Company's Cost of Capital Is Less Than the Required

question 68

Multiple Choice

If a company's cost of capital is less than the required return on equity, then the firm:

• A)Is financed with more than 50% debt
• B)Is perceived to be safe
• C)Has debt in its capital structure
• D)Cannot be using any debt

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Definitions:

Emotional Response

A reaction to something internally or externally that involves emotional feelings, such as happiness, anger, or sadness.

Information Overload

The state of being overwhelmed by the vast amount of available information, impeding understanding and decision-making.

Cognitive Dissonance

The psychological discomfort experienced when holding two or more conflicting beliefs, ideas, or values at the same time.

Displays

Gestures that are used like nonverbal punctuation marks, such as pounding your fist on the table.