17. Which of the following statements is FALSE?

A) The firms weighted average cost of capital (WACC) is the cost of capital that reflects the risk of the overall business, which is the combined risk of the firms equity and debt.

B) When using the discounted free cash flow model we should use the firm's WACC as the discount rate.

C) When using the dividend-discount model we should use the firm's equity cost of capital.

D) When using the discounted free cash flow model we should use the firm's equity cost of capital.

18. Which of the following statements is FALSE?

A) If the bond trades at a discount, and investor who buys the bond will earn a return both from receiving the coupons and from receiving a face value that exceeds the price paid for the bond.

B) Most coupon bond issuers choose a coupon rate so that the bonds will initially trade at, or very near to, par.

C) Coupon bonds always trade for a discount.

D) At any point in time, changes in market interest rates affect a bond's yield to maturity and its price.

19. Which of the following statements is FALSE?

A) When a bond is trading at a discount, the price drop when a coupon is paid will be larger than the price increase between coupons, so the bond price will tend to decline as time passes.

B) When a bond trades at a price equal to its face value, it is said to trade at par.

C) As interest rates and bond yield rise, bond prices will fall.

D) Ultimately, the prices of all bonds approach the bond's face value when the bonds mature and their last coupon are paid.