Which of the Following Statements Is FALSE

question 20

Multiple Choice

Which of the following statements is FALSE?

• A)One disadvantage of using leverage is that it does not allow the original owners of the firm to maintain their equity stake.
• B)The separation of ownership and control creates the possibility of management entrenchment;facing little threat of being fired and replaced,managers are free to run the firm in their own best interests.
• C)Managers also have their own personal interests,which may differ from those of both equity holders and debt holders.
• D)The costs of reduced effort and excessive spending on perks are another form of agency cost.

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Definitions:

Projection

A defense mechanism where individuals attribute their own unacceptable thoughts, feelings, or motives to another person.

Anxiety

A feeling of worry, nervousness, or unease, often about an imminent event or something with an uncertain outcome.

Archetypes

Universal, symbolic patterns that appear in myths, stories, and dreams, representing human fundamental types or experiences.

Cultural Art

Expressions of creativity that represent the traditions, beliefs, and practices of a society or community, including music, dance, painting, sculpture, and other forms of artistic activities.