Which One of These Statements Is Correct

question 35

Multiple Choice

Which one of these statements is correct?

• A)Firms across all industries in the U.S.tend to have similar debt-to-equity ratios.
• B)The banking industry tends to have the lowest debt-to-equity ratio of any United States industry.
• C)Financial leverage lowers risk to equity holders.
• D)MM Propositions ignore bankruptcy costs.
• E)MM Propositions,without taxes,illustrate that a firm's overall cost of capital is affected by leverage.

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Definitions:

Heuristics

Mental shortcuts or rules of thumb that simplify decision-making processes but sometimes lead to biased or inaccurate judgments.

Intentions

Planned or desired outcomes that an individual seeks to achieve through specific actions.

Actions

Behaviours or deeds performed by individuals in response to external or internal stimuli.

Conformists

Individuals who comply with group norms or standards.