Which of the Following Statements Is FALSE

question 63

Multiple Choice

Which of the following statements is FALSE?

• A)With no debt,the WACC is equal to the unlevered equity cost of capital.
• B)With perfect capital markets,a firm's WACC is dependent of its capital structure and is equal to its equity cost of capital only if the firm is unlevered.
• C)As the firm borrows at the low cost of capital for debt,its equity cost of capital rises,but the net effect is that the firm's WACC is unchanged.
• D)Although debt has a lower cost of capital than equity,leverage does not lower a firm's WACC.

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Definitions:

Motion In Limine

A legal motion filed by a party asking the court to limit or prevent certain evidence from being presented during the trial.

Directed Verdict

A ruling by a judge in a jury trial, typically taking place before the jury deliberates, concluding that no reasonable jury could reach a different conclusion and therefore a verdict is directed without jury consideration.

Judgment As A Matter Of Law

A legal ruling by a judge, typically during a trial, stating that no reasonable jury could find for the other side based on the factual evidence presented.

Pretrial Conference

A meeting between the parties involved in a legal case and a judge to discuss the details of the trial, settle procedural matters, and sometimes resolve the case without a trial.