If a Company's WACC Is Less Than the Required Return

question 65

Multiple Choice

If a company's WACC 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) is all equity financed.

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Definitions:

Quantity

Specifies the amount or number of a material or immaterial in numerical terms, indicating how much there is of something.

Quality

The standard or degree of excellence of something, often measured against similar things.

Relation

The way in which two or more concepts, objects, or people are connected, or the state of being connected.

Manner

Refers to the way in which an action is performed or how a particular task is executed.