Which of the Following Statements Is FALSE

question 75

Multiple Choice

Which of the following statements is FALSE?

• A)Holding cash has the opposite effect of leverage on risk and return.
• B)We use the market value of the firm's net debt when computing its WACC and unlevered beta to measure the cost of capital and market risk of the firm's business assets.
• C)Since the WACC does not change with the use of leverage,the value of the firm's free cash flow evaluated using the WACC does not change,and so the enterprise value of the firm does not depend on its financing choices.
• D)Even if the firm's capital structure is more complex,the WACC is calculated by computing the weighted average cost of only the firm's debt and equity.

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Definitions:

Self-Presentational Concerns

Worries or considerations about how one is perceived by others or manages impressions in social interactions.

Subjective Norm

The perceived social pressure to engage or not engage in a particular behavior, influenced by the beliefs about what others think one should do.

Implicit Attitude

Unconscious beliefs or feelings towards objects or individuals that influence one's reactions and decisions without explicit awareness.

Objective Norm

A perceived rule of behavior that is considered standard and acceptable by a majority within a societal or cultural context.