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Which of the following statements is FALSE? (a) Leverage decreases the risk of the equity of a firm. (b) Because the cash flows of the
Which of the following statements is FALSE? (a) Leverage decreases the risk of the equity of a firm. (b) Because the cash flows of the debt and equity sum to the cash flows of the project, by the Law of One Price the combined values of debt and equity must be equal to the cash flows of the project. (c) It is inappropriate to discount the cash flows of levered equity at the same discount rate that we use for unlevered equity
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