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.

---

Definitions:

Business Priority

The ranking or importance of tasks, goals, or objectives within a business to guide decision-making and resource allocation.

Bar Code Scanning

The use of optical scanners to read printed bar codes on items and translate them into digital information.

RFID Technologies

Stands for Radio-Frequency Identification, a technology that uses electromagnetic fields to automatically identify and track tags attached to objects.

Political Decision Making

The process of decision-making that is influenced by political factors or considerations, often found within government, but also in organizations.