Which of the Following Statements Is FALSE

question 20

Multiple Choice

Which of the following statements is FALSE?

• A)The levered equity return equals the unlevered return,plus an extra "kick" due to leverage.
• B)By holding a portfolio of the firm's equity and its debt,we can replicate the cash flows from holding its levered equity.
• C)The cost of capital of levered equity is equal to the cost of capital of unlevered equity plus a premium that is proportional to the market value debt-equity ratio.
• D)If a firm is unlevered,all of the free cash flows generated by its assets are available to be paid out to its equity holders.

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Definitions:

Decision Categories

Various classifications or groupings of decisions based on criteria, purpose, or context within business or personal planning.

Customer Order Receiving

The process of accepting requests for products or services from customers and entering them into a system for fulfillment.

Ownership Transfer

The legal process of transferring the title of property from one party to another, often through a sale, gift, or inheritance.

Product Preparation

The process of getting a product ready for sale, including assembly, quality checks, and packaging.