Which of the Following Statements Is FALSE

question 82

Multiple Choice

Which of the following statements is FALSE?

• A)Financial transactions are not sources of value,but merely serve to adjust the timing and risk of the cash flows to best suit the needs of the firm or its investors.
• B)The NPV of trading a security in a normal market is zero.
• C)We cannot separate a firm's investment decision from the decision of how to finance the investment.
• D)In normal markets,trading securities neither creates nor destroys value.

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Definitions:

Money Holdings

The amount of cash or liquid assets that a person or entity possesses at any given time.

Money Supply

The whole amount of money resources available in an economy at a given interval.

Equilibrium Value

The price or point at which supply and demand for a good or service are equal, leading to market stability.

Price Level

The average price for every good and service within the current economic landscape.