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:

Market Intermediaries

Businesses or individuals that act as a middleman in the distribution process, facilitating transactions between producers and consumers.

Business-To-Business (B2B)

Describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or a wholesaler and a retailer.

Business-To-Consumer (B2C)

A transaction model where businesses sell products or services directly to consumers, typically through retail or online platforms.