Which of the Following Statements Is False

question 26

Multiple Choice

Which of the following statements is false?

• A) From a theoretical standpoint,the capital weights used to calculate the WACC should be based on the market values of the different securities.However,if a firm's book value weights are close to its market value weights,book value weights can be used as proxies.
• B) Generally,only long-term debt is included in the calculation of the WACC,because the WACC is used for capital budgeting purposes,which includes long-term assets,and those assets are financed with long-term capital.
• C) The first break point a firm encounters in capital budgeting is for retained earnings,unless a firm has zero or negative net income.
• D) The weighted average cost of capital will change whenever a break point occurs.
• E) Answers a and b are both false.

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Definitions:

Erodes Ability

The gradual loss or diminishing of competence or power to perform effectively, often due to persistent challenges or obstacles.

Reflexively Manage Risks

The process of continuously assessing and adjusting one's actions in response to potential risks and uncertainties, with an awareness of the impact of those actions on oneself and others.

Juggernaut Of Modernity

A metaphorical expression describing the relentless, overwhelming force of modernization and its transformative impacts on societies and cultures.

Agency

Refers to the capacity of individuals to act independently and to make their own free choices.