Which of the Following Statements Is FALSE

question 108

Multiple Choice

Which of the following statements is FALSE?

• A)When a firm faces financial distress,creditors can gain by making sufficiently risky investments,even if they have negative NPV.
• B)When a firm has leverage,a conflict of interest exists if investment decisions have different consequences for the value of equity and the value of debt.
• C)In some circumstances,managers may take actions that benefit shareholders but harm the firm's creditors and lower the total value of the firm.
• D)Agency costs are costs that arise when there are conflicts of interest between stakeholders.

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Definitions:

Recognition

The process or ability to identify previously encountered information, objects, or situations.

Measures of Retention

Techniques or assessments used to evaluate the amount of information or knowledge that has been remembered or preserved over time.

Triggering Retrieval

The process of initiating the recall of information from memory, often facilitated by cues or context.

Implicit Memories

Memories that influence thoughts and behaviors without conscious awareness, such as skills and learned tasks.