Which of the Following Statements Is FALSE

question 27

Multiple Choice

Which of the following statements is FALSE?

• A)As long as the firm's choice of securities does not change the cash flows generated by its assets,the capital structure decision will not change the total value of the firm or the amount of capital it can raise.
• B)If securities are fairly priced,then buying or selling securities has an NPV of zero and,therefore,should not change the value of a firm.
• C)The future repayments that the firm must make on its debt are equal in value to the amount of the loan it receives up front.
• D)An investor who would like more leverage than the firm has chosen can lend and add leverage to his or her own portfolio.

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Definitions:

Empirical

Refers to something that is based on careful and systematic observation.

Systematic Observations

The careful, deliberate observation of the natural world with the aim of collecting data in a consistent manner for the purpose of analysis.

Sociological Imagination

The ability to see the societal patterns that influence individual and group life.

Social Controversy

A dispute within society over a particular issue or set of issues, often involving differing values, beliefs, and opinions among groups or individuals.