Which of the Following Statements Is FALSE

question 40

Multiple Choice

Which of the following statements is FALSE?

• A)While debt itself may be cheap,it increases the risk and therefore the cost of capital of the firm's equity.
• B)Although debt does not have a lower cost of capital than equity,we can consider this cost in isolation.
• C)We can use Modigliani and Miller's first proposition to derive an explicit relationship between leverage and the equity cost of capital.
• D)The total market value of the firm's securities is equal to the market value of its assets,whether the firm is unlevered or levered.

---

Definitions:

Quota Sampling

A sampling method where the sample is chosen to reflect certain characteristics of the population in proportion.

Subcultural

Pertaining to a group within a larger culture that differentiates itself from the larger culture through a unique set of beliefs, values, or behaviors.

Deviant Group

A collection of individuals who deviate from societal norms or values, often resulting in societal judgment or sanction.

Complete Participant

A researcher fully participates in the social setting under study without revealing their research intentions.