Which of the Following Is Not True About Debt Financing

question 37

Multiple Choice

Which of the following is not true about debt financing and the weighted average cost of capital?

• A)Debt is usually the cheapest source of financing.
• B)As the level of debt increases beyond the optimum capital structure, the cost of capital increases.
• C)No debt in the firm's capital structure will minimize the firm's weighted average cost of capital.
• D)None of these options

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Definitions:

Standard Deviation

A parameter quantifying the divergence or scattering of data points in a dataset, reflecting the distance of these points from the average.

Shoe Life

In product durability, shoe life refers to the expected or actual duration that a shoe remains usable or maintains its quality under normal wearing conditions.

Marathon Runners

Athletes who participate in long-distance running events, typically 26.2 miles or 42.195 kilometers in length.

Standard Deviation

An indicator that quantifies the spread or diversity among data set values, showing the degree to which these values deviate from the average.