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:

Intentional Conduct

Describes actions undertaken with the aware intent to cause a particular result or outcome.

Legal Imperialism

American insistence that all disputes be resolved under American law.

Corporate Governance

The system of rules, practices, and processes through which a company is directed and controlled, focusing on balancing the interests of its various stakeholders.

American Law

The legal system of the United States, including its statutes, regulations, case law, and constitutional provisions.