Which of the Following Statements Is CORRECT

question 61

Multiple Choice

Which of the following statements is CORRECT?

• A) Since debt financing is cheaper than equity financing, raising a company's debt ratio will always reduce its WACC.
• B) Increasing a company's debt ratio will typically reduce the marginal cost of both debt and equity financing.However, this action still may raise the company's WACC.
• C) Increasing a company's debt ratio will typically increase the marginal cost of both debt and equity financing.However, this action still may lower the company's WACC.
• D) Since a firm's beta coefficient it not affected by its use of financial leverage, leverage does not affect the cost of equity.
• E) Since debt financing raises the firm's financial risk, increasing a company's debt ratio will always increase its WACC.

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Definitions:

Immune Response

The body's defense mechanism against pathogens, involving recognition and elimination of foreign substances.

IgE

Immunoglobulin E, a class of antibodies produced by the immune system in response to allergens, playing a key role in allergic reactions.

Parasitic Worms

Organisms that live on or inside another host organism, causing harm by feeding off the host's nutrients.

IgA

Crucial for the immunity of mucosal surfaces, Immunoglobulin A functions as a key antibody type.