Consider the Following Equation for the Question(s) Below

question 108

Multiple Choice

Consider the following equation for the question(s) below.

-Which of the following statements is FALSE?

• A) The levered equity return equals the unlevered return plus an extra "kick" due to leverage.
• B) By holding a portfolio of a firm's equity and its debt, we can replicate the cash flows from holding its levered equity.
• C) The cost of capital of levered equity is equal to the cost of capital of unlevered equity plus a premium that is proportional to the market value debt-equity ratio.
• D) If a firm is unlevered, all of the free cash flows generated by its assets are available to be paid out to its equity holders.

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Definitions:

Conventional

Describes something that is based on or in accordance with what is generally done or believed, typical or traditional.

Sexual Orientation

An enduring pattern of emotional, romantic, or sexual attractions to men, women, both sexes, neither sex, or another sex.

Homosexuality

A sexual orientation characterized by attraction, either romantically or sexually, to individuals of the same gender.

Asexuality

A sexual orientation characterized by a lack of sexual attraction towards others.