Which of the Following Statements Is FALSE

question 93

Multiple Choice

Which of the following statements is FALSE?

• A)If there is uncertainty regarding EBIT,then with a higher interest expense there is a greater risk that interest will exceed EBIT.
• B)Even for a firm with positive earnings,growth will affect the optimal leverage ratio.
• C)From a tax perspective,the firm's optimal level of debt is proportional to its current earnings.
• D)The optimal proportion of debt in the firm's capital structure will be higher,the higher the firm's growth rate.

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Definitions:

Guardian Appointed

The designation of an individual by a court to manage the personal, financial, or legal matters of another person deemed unable to do so themselves.

Declared Insane

A legal determination that an individual lacks the mental capacity to manage their own affairs or responsibilities due to mental illness.

Misrepresentation of Age

Falsely presenting one's age to gain access to certain rights, benefits, or permissions not otherwise available.

Financing Agreement

A financing agreement is a legal contract between a borrower and a lender outlining the terms for borrowing money, including repayment schedule, interest rates, and any collateral.