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

question 107

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:

Depo-Provera

A contraceptive injection for women that contains the hormone progestin to prevent pregnancy.

Fem Cap

A small, dome-shaped, reusable contraceptive device made of silicone that is inserted into the vagina to cover the cervix and prevent sperm from entering.

Intrauterine Device (IUD)

A form of birth control placed inside the uterus to prevent pregnancy by altering the environment for sperm and eggs.

STIs

Sexually Transmitted Infections, a term encompassing various infectious diseases spread through sexual contact.