Which of the following statements is correct?
A) Decisions regarding a ﬁrm's debt and equity can be called capital budgeting decisions.
B) The asset beta is a measure of the unsystematic risk of a ﬁrm's assets.
C) In a purely capital restructuring, the composition of the assets of the ﬁrm will change.
D) The value of the overall ﬁrm will not change as a result of a capital restructuring unless the NPV of the restructuring is negative.
E) The use of personal leverage by an investor to alter the degree of ﬁnancial leverage of a ﬁrm is called homemade leverage.

Question

Quizplus · Accepted Answer

Homemade leverage refers to the use of personal borrowing by an investor to adjust their own financial leverage, effectively altering the leverage of the firm from their perspective.

Which of the Following Statements Is Correct