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.

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Definitions:

Fair Trial

A legal principle ensuring an impartial hearing, including the right to be heard, the right to have a competent judge, and the right to a decision based on evidence.

Original Location

The initial or first place where something was situated or where an event occurred.

State Court Systems

The courts within a specific state that handle legal disputes and matters according to that state's laws, as opposed to federal courts.

General Jurisdiction

The authority of a court to hear cases of all types, including both civil and criminal matters, without limitation to a specific subject matter.