Using the Weighted Average Cost of Capital as the Required

question 53

Multiple Choice

Using the weighted average cost of capital as the required rate of return for every project will

• A) cause a firm to reject projects that should have been accepted.
• B) cause a firm to accept projects that were too risky.
• C) result in maximization of shareholder wealth.
• D) A and B above

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Definitions:

Government Deficit Reduction

Measures taken by a government to decrease the amount by which its spending exceeds its income, often implying budget cuts and/or tax increases.

FTC Act

The Federal Trade Commission Act, which established the Federal Trade Commission (FTC) to prevent unfair competition, deceptive practices, or misleading advertisements in the marketplace.

Unfair

A situation or action that is unjust, biased, or prejudicial, often referring to practices or treatments that deviate from equity or justice.

Deceptive

Intending to mislead or trick others by presenting false information or omitting the truth.