Which of the Following Statements Is FALSE

question 24

Multiple Choice

Which of the following statements is FALSE?

• A)In general,the gain to investors from the tax deductibility of interest payments is referred to as the interest tax shield.
• B)The interest tax shield is the additional amount that a firm would have paid in taxes if it did not have leverage.
• C)Because corporations pay taxes on their profits after interest payments are deducted,interest expenses reduce the amount of corporate tax firms must pay.
• D)As Modigliani and Miller made clear in their original work,capital structure matters in perfect capital markets.Thus,if capital structure does not matter,then it must stem from a market imperfection.

---

Definitions:

Lophotrochozoa

A group of protostome animals within the Ecdysozoa, including mollusks, annelids, and several other phyla, characterized by specific larval and ciliary features.

Madreporite

The madreporite is a sieve-like structure found in echinoderms, such as starfish, that serves as an entry point for water into the water vascular system.

Vascular System

involves the network of blood vessels in the body, including the arteries, veins, and capillaries, that circulate blood to deliver oxygen and nutrients to tissues.

Central Nerve Ring

A ring of nervous tissue found in certain invertebrates, such as echinoderms, functioning as a central nervous system component.