Which of the Following Statements Is FALSE

question 36

Multiple Choice

Which of the following statements is FALSE?

• A)In perfect capital markets,buying and selling securities is a zero-NPV transaction,so it should not affect firm value.
• B)Making positive-NPV investments will create value for the firm's investors,whereas saving the cash or paying it out will not.
• C)In perfect capital markets,if a firm invests excess cash flows in financial securities,the firm's choice of payout versus retention is irrelevant and does not affect the initial share price.
• D)After adjusting for investor taxes,there remains a substantial tax advantage for the firm to retain excess cash.

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Definitions:

Sedimentary Rocks

Rocks formed by the accumulation and cementation of mineral and organic particles on the Earth's surface, often containing fossils.

Topographic Map

A map showing the topographic features of a land surface, commonly by means of contour lines.

Elevation

The height of a point on Earth's surface above a reference level, usually sea level.

Inferring Environment

A process of deducing the natural conditions and surroundings of a specific area based on present and historical data.