Which of the Following Statements Is FALSE

question 85

Multiple Choice

Which of the following statements is FALSE?

• A) When a firm issues new shares that account for a significant percentage of its outstanding shares, the transaction is called a leveraged recapitalisation.
• B) By choosing positive-NPV projects that are worth more than their initial investment, the firm can enhance its value.
• C) MM Proposition I applies to capital structure decisions made at any time during the life of the firm.
• D) The choice of capital structure does not change the value of the firm if the cash flows generated by the firm's assets are assumed to remain constant.

---

Definitions:

Capital Contribution

The act of injecting funds or other assets into a company or partnership by its owners or partners to support its operations or investment activities.

Limited Partners

Investors in a partnership who have limited liability to the extent of their investment in the company and do not participate in day-to-day management.

Partnership Business

A business organization in which two or more individuals manage and operate the business in accordance with the terms and objectives set out in a Partnership Agreement.

Access

The ability or right to approach, enter, or use something.