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Which One of the Following Statements Is Correct,all Else Held

Question 22

Multiple Choice

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


A) A decrease in a firm's WACC will increase the attractiveness of the firm's investment options.
B) WACC is only applicable to firms that issue both common and preference shares.
C) Beta is used to compute the return on equity and the standard deviation is used to compute the return on preference shares.
D) If you have both the dividend growth and the security market line's costs of equity,you should use the higher of the two estimates when computing WACC.
E) The after-tax cost of debt increases when the market price of a bond increases.

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