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:

Electronically Mediated Communication

The exchange of information between individuals through electronic means, including email, social media, and texting.

Text Messaging

The act of sending brief, written messages via cellular or mobile phone network from one person to another.

Polygraph Machine

A device used to measure and record physiological responses such as blood pressure, pulse, and perspiration, often used in lie detection.

Neural Activity

The electrical and chemical processes that occur within neurons and neural networks in the brain and nervous system.