Which of the Following Statements Is FALSE

question 66

Multiple Choice

Which of the following statements is FALSE?

• A)Leverage decreases the risk of the equity of a firm.
• B)Because the cash flows of the debt and equity sum to the cash flows of the project,by the Law of One Price the combined values of debt and equity must be equal to the cash flows of the project.
• C)Franco Modigliani and Merton Miller argued that with perfect capital markets,the total value of a firm should not depend on its capital structure.
• D)It is inappropriate to discount the cash flows of levered equity at the same discount rate that we use for unlevered equity.

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Definitions:

Internal Attribution

The process of explaining one's own or others' behavior as due to personal, intrinsic factors.

External-Unstable

A causation attribution in psychology where an individual attributes events to causes outside themselves that are variable or subject to change.

Internal-Stable

A characteristic or attribute that is considered innate and constant within an individual or situation.

Bad Teacher

A term typically used to describe an educator who is unsuccessful in engaging or educating their students effectively.