Which of the Following Statements Is Correct

question 57

Multiple Choice

Which of the following statements is correct?

• A)In general, a firm with low operating leverage also has a small proportion of its total costs in the form of fixed costs.
• B)There is no reason to think that changes in the personal tax rate would affect firms' capital structure decisions.
• C)A firm with high business risk is more likely to increase its use of financial leverage than a firm with low business risk, assuming all else is equal.
• D)If a firm's after-tax cost of equity exceeds its after-tax cost of debt, it can always reduce its WACC by increasing its use of debt.

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Definitions:

Quality of Supervision

The effectiveness and competency of supervisors in managing, directing, and enhancing the performance of their subordinates.

Work Itself

The tasks, duties, and responsibilities that constitute a job or role within an organization or profession.

Rational Commitments

Decisions and commitments made based on logical reasoning, factual assessment, and practical considerations, devoid of emotional biases.

Values

Fundamental beliefs or principles that guide an individual's or organization's actions and decisions.