Which of the Following Statements Is FALSE

question 18

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 a net present value (NPV) of zero and, therefore, should not change the value of a firm.
• C) An investor who would like more leverage than the firm has chosen can lend and add leverage to his or her own portfolio.
• D) 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.

---

Definitions:

Gases

States of matter consisting of particles that have neither a defined volume nor shape, able to expand freely to fill any space available, such as oxygen and nitrogen.

Pulmonary Emphysema

A chronic respiratory disease where the air sacs (alveoli) in the lungs are damaged, leading to breathlessness.

Alveoli

Tiny air sacs in the lungs where the exchange of oxygen and carbon dioxide takes place, crucial for respiratory function in mammals.

Elasticity

The ability of a material or body to resume its normal shape after being stretched or compressed.