Which of the Following Statements Is FALSE

question 28

Multiple Choice

Which of the following statements is FALSE?

• A)Modigliani and Miller's conclusion verified the common view,which stated that even with perfect capital markets,leverage would affect a firm's value.
• B)We can evaluate the relationship between risk and return more formally by computing the sensitivity of each security's return to the systematic risk of the economy.
• C)Investors in levered equity require a higher expected return to compensate for its increased risk.
• D)Leverage increases the risk of equity even when there is no risk that the firm will default.

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Definitions:

Informal

Relating to interactions that occur in a casual or non-official capacity.

Politic Appropriately

The practice of navigating and engaging in workplace or organizational politics in a manner that is considered suitable and tactful.

Evaluating Organization

The practice of assessing the structures, procedures, and outcomes within an organization to determine effectiveness and efficiency.

Observing And Listening

The act of paying attention and actively understanding information through sight and sound.