Which of the Following Statements Is FALSE

question 20

Multiple Choice

Which of the following statements is FALSE?

• A) A firm's weighted average cost of capital, denoted r_wacc, is the cost of capital that reflects the risk of the overall business, which is the combined risk of the firm's equity and debt.
• B) Intuitively, the difference between the discounted free cash flow model and the dividend-discount model is that in the divided-discount model, a firm's cash and debt are included indirectly through the effect of interest income and expenses on earnings in the dividend-discount model.
• C) We interpret r_wacc as the expected return a firm must pay to investors to compensate them for the risk of holding the firm's debt and equity together.
• D) When using the discounted free cash flow model, we should use a firm's equity cost of capital.

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Definitions:

Collective Action

Joint efforts by individuals or groups to achieve a common objective, often used in the context of protests, social movements, or collaborative projects.

Social Movements

Organized collective efforts aimed at promoting or resisting change in society.

Lynch Mobs

Groups of people who take the law into their own hands to execute summary justice, often without a fair trial.

Riots

Violent disturbances of the peace by a crowd or public assembly.