Consider the Following Equation for the Question(s) Below

question 66

Multiple Choice

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

-Which of the following statements is TRUE?

• A) Holding cash has the opposite effect of leverage on risk and return.
• B) We use the market value of a 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 a 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 a 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.

---

Definitions:

Organizations

Structured groups of people who come together to achieve common goals.

Families

Are groups of related individuals, bound by connections that are biological, legal, or emotional.

Institutional Collectivism

The degree to which organizational or societal practices encourage and reward collective distribution of resources and collective action.

Cultural Dimension

A framework for understanding how the values and behaviors of societies are influenced by their cultures, often used to compare cultures across different regions or groups.