Which one of the following statements is correct, all else held constant?

Question

Quizplus · Accepted Answer

A decrease in WACC will lower the cost of capital for the firm, making the investment options more attractive. A) Beta is used to compute the cost of equity, not return on equity. Standard deviation is not used to compute the return on preferred. C) An increase in bond price will decrease the yield-to-maturity, and hence, decrease the aftertax cost of debt. D) There is no such thing as the "security market line's cost of equity." You may use the CAPM to estimate the cost of equity but not the security market line. E) WACC can be computed for any firm, regardless of whether it issues preferred stock.

Which One of the Following Statements Is Correct, All Else