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:

Duty Of Obedience

The requirement for directors and officers of an organization to act in accordance with its goals and directives.

Clearly Stated

Expressed in a manner that leaves no doubt about the meaning or intentions.

Good Faith

The principle of honesty and sincerity in dealings, especially in fulfilling contractual obligations.

Gratuitous Agent

An individual who acts on behalf of another without receiving any compensation for his/her actions.