Use the Following Information to Answer the Question(s)below

question 49

Multiple Choice

Use the following information to answer the question(s) below.
Consider the following information regarding corporate bonds:
-If a firm's excess cash holdings are greater than its debt,using net debt as the measure of leverage will result in:

• A)its unlevered beta and cost of capital equalling zero.
• B)its unlevered beta and cost of capital being greater than its equity beta and cost of capital.
• C)the risk of the firm's equity being increased by its cash holdings in excess of its operating needs.
• D)the risk of the firm's debt being increased by its cash holdings in excess of its operating needs.

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Definitions:

Intent

Intent signifies the purpose or goal that an individual or entity aims to achieve through their actions or decisions.

Cultural Norms

Shared expectations and rules that guide behavior of people within social groups, defining acceptable actions within a society or group.

Dietary Supplements

Products taken orally that contain dietary ingredients intended to supplement the diet, such as vitamins, minerals, herbs, or other botanicals.