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

Beta is used to compute the return on equity and the standard deviation is used to compute the return on preferred.

A decrease in a firm's WACC will increase the attractiveness of the firm's investment options.

The aftertax cost of debt increases when the market price of a bond increases.

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.

WACC is only applicable to firms that issue both common and preferred stock.

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Category:- Basic Finance
Reference No.:- M9871713

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