With Respect to the WACC

question 105

Multiple Choice

With respect to the WACC:

• A) it is the proper discount rate for everything the company does.
• B) it is used to value all new projects.
• C) this benchmark discount rate is adjusted for the riskiness of the project.
• D) no adjustments need to be made when using it as the discount rate.

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Definitions:

Correlated

A statistical relationship indicating that two variables move in relation to each other, either positively or negatively.

Relationship

How two or more entities, things, or persons relate to each other, or their state of linkage.

Predict

To declare or indicate an event, condition, or result in the future, typically based on observation, experience, or scientific reasoning.

Representative Sample

A smaller portion of a population that accurately represents the characteristics of the whole population.