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.

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Definitions:

Alveolar Capillary Membrane

The thin barrier in the lungs where gas exchange occurs between the air in the alveoli and the blood in the capillaries.

Diffusion

Movement of molecules from an area of high concentration to one of lower concentration.

Ventilation

Respiratory process by which gases are moved into and out of the lungs.

Electrocardiogram (ECG)

Graphic record of the electrical activity of the myocardium.