Which of the following statements is correct?

		a) When calculating the WACC, it is a standard practice to subtract dividend and risk-free securities to compute the net debt outstanding.
		b) When corporate tax rates decline, the effective cost of debt increases.
		c) A projects cost of capital does not depend on its risk.
		d) The pre-tax cost of debt equals to the debts coupon rate.

Which of the following statements is correct?

		a. The volatility of an individual stock is always less than the volatility of a well-diversified portfolio of stocks.
		b. When we combine stocks in a portfolio, the amount of risk that is eliminated depends on the degree to which the stocks move together.
		c. When we form an equally weighted portfolio of stocks and keep increasing the number of stocks in the portfolio, the volatility of the portfolio increases.
		d. Diversification does not change the risk of a portfolio because stocks movements are fully predictable

Which of the following statements is FALSE?

		a. A firm that raises all of its capital via equity is referred to as an unlevered firm.
		b. WACC is the average of a firms equity and debt cost of capital, weighted by their relative proportion.
		c. A firm's cost of debt is the rate of interest it would have to pay to refinance its existing debt.
		d. In WACC calculation, we determine the weights based on the book values of debt and equity.