Which of the Following Statements Regarding Recapitalizations Is FALSE

question 43

Multiple Choice

Which of the following statements regarding recapitalizations is FALSE?

• A)With a recapitalization,even though leverage reduces the total value of equity,shareholders capture the benefits of the interest tax shield up front.
• B)The share price always rises after the completion of the recapitalization.
• C)Leveraged recaps were especially popular in the mid- to late-1980s,when many firms found that these transactions could reduce their tax payments.
• D)When a firm makes a significant change to its capital structure,the transaction is called a recapitalization.

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Definitions:

Sustainability

The practice of maintaining processes or systems in a way that does not deplete natural resources, ensuring long-term ecological balance.

Competitive Advantage

The attributes or conditions that allow a company to produce goods or services better or more cheaply than its competitors.

Environmental Costs

Expenses associated with the negative impact of a company's operations on the natural environment, including waste disposal, pollution control, and resource depletion.

Climate Change

A significant and lasting change in the statistical distribution of weather patterns over periods ranging from decades to millions of years.