Which of the Following Does Not Correctly Describe Influences on the Level

question 36

Multiple Choice

Which of the following does not correctly describe influences on the level of gearing?

• A) The risk of financial distress causes firms to moderate their gearing levels.
• B) In Modigliani and Miller's world with corporate tax, the optimal gearing is the highest possible.
• C) Reinvestment risk is diminished by high gearing.
• D) Managers generally have a preference for high gearing levels.

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Definitions:

Tapeworm

A parasitic flatworm that lives in the digestive tracts of vertebrates, absorbing nutrients from the host's diet.

Pseudocoelom

Fluid-filled cavity between the gut and body wall; partially lined by tissue derived from mesoderm.

Tubular Digestive System

A type of digestive system in which the digestive tract forms a continuous tube from mouth to anus, allowing for sequential processing of food.

Roundworms

A group of invertebrates belonging to the phylum Nematoda, characterized by long, cylindrical bodies.