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:

Credit Period

The duration of time a buyer is allowed to pay for goods or services after the delivery date.

Type of Credit Instrument

A financial tool or document, such as a loan or bond, that provides evidence of debt or an extension of credit from one party to another.