Which of the Following Statements Is FALSE

question 39

Multiple Choice

Which of the following statements is FALSE?

• A)When a firm issues new shares that account for a significant percentage of its outstanding shares,the transaction is called a leveraged recapitalization.
• B)MM Proposition I applies to capital structure decisions made at any time during the life of the firm.
• C)By choosing positive-NPV projects,the firm can enhance its value.
• D)Holding fixed the cash flows generated by the firm's assets,however,the choice of capital structure does not change the value of the firm.

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Definitions:

Elasticity of Demand

Estimating how much the demand for a product fluctuates in response to changes in its price.

Resource Markets

Markets in which business firms demand factors of production (for example, labor, capital, and natural resources) from household suppliers. The resources are then used to produce goods and services. These markets are sometimes called factor markets or input markets.

Quantity Supplied

The quantity of a product or service that suppliers are ready and capable of selling at a specific price.

Inversely Related

A term used to describe a situation in which one variable increases as another variable decreases.