1. A firm that uses its WACC as a cutoff without consideration of project risk:

1. Tends to become less risky over time.
2. Tends to reject more negative NPV projects over time.
3. Likely will see its WACC rise over time.
4. Will only accept projects where the IRR is equal to the WACC

1. The type of risk that we can diversify away is ____________
   1. Unsystematic risk
   2. Systematic risk
   3. Nondiversifiable risk

d. Systemwide risk