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:

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services to consumers in exchange for money.

Total Profit

The overall financial gain made by a business after subtracting all costs from the total revenue generated from its operations.

AVC

Average Variable Cost; the total variable cost divided by the quantity of output produced.

ATC

Stands for "Average Total Cost," which refers to the total cost divided by the quantity of goods produced, in economics.