Which of the Following Statements Is CORRECT

question 32

Multiple Choice

Which of the following statements is CORRECT?

• A) there is no reason to think that changes in the personal tax rate would affect firms' capital structure decisions.
• B) a firm with high business risk is more likely to increase its use of financial leverage than a firm with low business risk, assuming all else equal.
• C) if a firm's after-tax cost of equity exceeds its after-tax cost of debt, it can always reduce its wacc by increasing its use of debt.
• D) suppose a firm has less than its optimal amount of debt. increasing its use of debt to the point where it is at its optimal capital structure will decrease the costs of both debt and equity financing.
• E) in general, a firm with low operating leverage also has a small proportion of its total costs in the form of fixed costs.

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Definitions:

Ventricular Contraction

The phase of the heart cycle in which the ventricles contract, pumping blood out of the heart to the lungs and the rest of the body.

Aortic And Pulmonary Valves

Parts of the heart that regulate blood flow from the heart to the aorta and the pulmonary artery, respectively.

Initiate Blood Clots

The process of starting the coagulation cascade, which leads to the formation of a blood clot to stop bleeding.