If a Firm's Excess Cash Holdings Are Greater Than Its

Multiple Choice

If a firm's excess cash holdings are greater than its debt,using net debt as the measure of leverage will result in:

A) its unlevered beta and cost of capital equaling zero.
B) its unlevered beta and cost of capital being greater than its equity beta and cost of capital.
C) the risk of the firm's equity being increased by its cash holdings in excess of its operating needs.
D) the risk of the firm's debt being increased by its cash holdings in excess of its operating needs.