Which of the Following Statements Is False

question 69

Multiple Choice

Which of the following statements is false?

• A)With zero taxes and zero bankruptcy costs, the value of the firm is independent of its debt-equity ratio.
• B)With taxes and zero bankruptcy costs, the value of the firm reaches a maximum and then declines as the debt-equity ratio increases.
• C)With taxes and bankruptcy costs, the value of the firm reaches a maximum and then declines as the debt-equity ratio increases.
• D)With taxes and bankruptcy costs, the value of the firm is independent of its debt-equity ratio.

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Definitions:

Instrument

A formal legal document that records a right, duty, or the execution of a transaction, such as contracts, deeds, and promissory notes.

UCC

Short for Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States, including sales, leases, negotiable instruments, and secured transactions.

Signature

A person's name or mark written by themselves, used as a proof of intention and identity in a document.

Laborer's Pension Fund

A retirement fund specifically designed for the benefit of labor union members.