Which of These Makes This a True Statement? When Determining

question 4

Multiple Choice

Which of these makes this a true statement? When determining the appropriate weights used in calculating a WACC, it should reflect

• A) the relative sizes of the total book capitalizations for each kind of security that the firm issues.
• B) the relative sizes of the total market capitalizations for each kind of security that the firm issues.
• C) only the market after-tax cost of debt.
• D) only the market after-tax cost of equity.

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Definitions:

F Statistic

A ratio used in statistical analysis to determine the relationship between variances and to test hypotheses about the means of several populations.

Alternative Hypothesis

In statistical hypothesis testing, it is the hypothesis that suggests there is a difference or effect, in contrast to the null hypothesis which suggests no effect or difference.

Population Mean

The average characteristic or measure of a total population, representing a central or typical value of the population data.

Common Standard Deviation

A measure used in the context of comparing groups that assumes all groups have the same standard deviation, often used in analyses such as ANOVA.