Which One of the Following Statements Is TRUE

question 31

Multiple Choice

Which one of the following statements is TRUE?

• A) Lenders will protect themselves from asset switching by charging a higher interest rate.
• B) Creditors have a claim on a firm's earning stream through the dividend payments they receive.
• C) An example of asset switching is an option to exchange one piece of real estate for another.
• D) Lenders can't legally prevent a firm from engaging in asset switching.
• E) Firms borrowing money have greater flexibility to use that money when there are debt covenants.

---

Definitions:

Sampling Error

The discrepancy between a sample statistic and its corresponding population parameter, arising purely by chance because the sample is not a perfect representation of the population.

Nondirectional Research Hypothesis

A hypothesis suggesting a correlation between variables without defining the nature of their interaction.

Generalizability

The extent to which the findings from a study can be applied to a wider population or different contexts.

Null Hypothesis

A statement that asserts there is no effect or no difference, and it is the hypothesis that researchers aim to test against.