Which of the Following Statements Is FALSE

question 65

Multiple Choice

Which of the following statements is FALSE?

• A)Even after adjusting for personal taxes,the value of an unlevered firm exceeds the value of a levered firm,and there is no tax advantage to using debt financing.
• B)In Modigliani and Miller's setting of perfect capital markets,firms could use any combination of debt and equity to finance their investments without changing the value of the firm.
• C)When firms raise new capital from investors,they do so primarily by issuing debt.
• D)In most years aggregate equity issues are negative,meaning that firms are reducing the amount of equity outstanding by buying shares.

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Definitions:

Absolute Threshold

The smallest amount of stimulation needed for a stimulus to be detected by the senses 50% of the time.

Just Noticeable Difference

The minimum difference in stimulation that a person can detect 50% of the time.

Absolute Threshold

The minimum intensity of a stimulus that one can detect 50% of the time, a concept central to the study of sensory processes.

Taste Constancy

The perception that the flavor of a food item remains consistent despite changes in the environment or context.