Which of the Following Statements Is FALSE

question 95

Multiple Choice

Which of the following statements is FALSE?

• A)Even though firms have not issued new equity,the market value of equity has risen over time as firms have grown.
• B)While firms seem to prefer debt when raising external funds,not all investment is externally funded.
• C)To receive the full tax benefits of leverage a firm needs to use 100% debt financing.
• D)If bankruptcy is costly,these costs might offset the tax advantages of debt financing.

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Definitions:

Production Possibility Frontier

A curve depicting the maximum feasible amounts of two commodities that a society can produce with current technology and resources.

Trade-Offs

involve the balancing of factors or alternatives, where choosing one feature necessitates giving up another.

Economic Growth

An increase in the capacity of an economy to produce goods and services, compared from one period of time to another.

College Degree

A formal recognition of the completion of a specific program of studies at a college or university.