Which One of the Following Statements Is Accurate for a Levered

question 13

Multiple Choice

Which one of the following statements is accurate for a levered firm?

• A)WACC should be used as the required return for all proposed investments.
• B)A firm's WACC will decrease whenever the firm's tax rate decreases.
• C)An increase in the market risk premium will decrease a firm's WACC.
• D)The subjective approach totally ignores a firm's own WACC.
• E)A reduction in the risk level of a firm will tend to decrease the firm's WACC.

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Definitions:

Strict Liability

Responsibility for loss regardless of the circumstances.

Advertised Price

The price of a product or service that is publicly promoted or communicated to potential customers.

House Brand

A product that is marketed and sold by a retailer under its own brand name, as opposed to a brand name owned by a supplier.

UPC Bar Code

Universal Product Code; a barcode symbology used for tracking trade items in stores primarily in the United States.