Which of the Following Statements Is TRUE About the Weighted

question 157

Multiple Choice

Which of the following statements is TRUE about the weighted average cost of capital (WACC) ?

• A) If a business has a high risk level, the WACC will be higher.
• B) If a business has a high risk level, the WACC will be lower.
• C) The WACC represents the corporation's internal return targets.
• D) The WACC is the same as a business's ROI.

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Definitions:

Personal Property Security Act

Legislation that outlines the rules for creating and enforcing security interests in personal property, offering a way for creditors to secure repayment of debt.

Attachment

A legal process by which a court of law, at the request of a creditor, designates specific property owned by the debtor to be transferred to the creditor, or sold for the benefit of the creditor.

Perfection

Protection of a secured creditor’s claim, either by registering the secured obligation or by taking possession of the collateral.

Security

Collateral or asset pledged to guarantee the repayment of a loan or fulfillment of a contractual obligation.