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:

Stigmatized Minority

Refers to a group within society that is singled out and discriminated against due to attributes or characteristics seen as deviant or undesirable.

Ethnic Differences

Variations in behaviors, traditions, practices, and beliefs observed between distinct ethnic groups or cultures.

Intelligence Test Scores

Numeric scores derived from assessments designed to measure an individual's cognitive abilities in comparison to a population norm.

Subjectively Biased Judgments

Evaluations or decisions made based on personal feelings, tastes, or opinions rather than on objective reality, evidence, or rationality.