The Law of Conservation of Value Implies That

question 71

Multiple Choice

The law of conservation of value implies that:

• A) The value of a firm's common stock is unchanged when debt is added to its capital structure
• B) The value of any asset is preserved regardless of the nature of the claims against it
• C) The value of a firm's debt is unchanged when common stock is added to its capital structure
• D) None of the above

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Definitions:

VSEPR

Valence Shell Electron Pair Repulsion theory, a model used to predict the geometry of individual molecules from the number of electron pairs surrounding their central atoms.

Lewis Structures

Diagrams that represent the valence electrons of atoms within a molecule, indicating the bonding between atoms and the lone pairs of electrons.

Elemental Symbol

A one or two-letter notation derived from the Latin name of a chemical element used to represent it in the periodic table, such as H for hydrogen.

Lewis Structure

Lewis structures, also known as Lewis dot diagrams, are a graphical representation of molecules showing how valence electrons are distributed among the atoms and indicating the bonds between atoms.