Which of the Following Statements Is FALSE

question 74

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) 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.
• C) Although debt does not have a lower cost of capital than equity, we can consider this cost in isolation.
• D) We can use MM Proposition I to derive an explicit relationship between leverage and the equity cost of capital.

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Definitions:

Vivid Visual

Describes images that are strikingly clear and detailed, often produced in the mind or through visual media.

Neurotransmitters

chemical substances in the nervous system that transmit signals between neurons or from neurons to muscles.

Alcohol

A psychoactive substance that is the active ingredient in drinks such as beer, wine, and spirits, causing changes in mood, perception, and behavior when consumed.

GABA

Gamma-Aminobutyric Acid, the primary inhibitory neurotransmitter in the brain, playing a role in reducing neuronal excitability throughout the nervous system.