Which of the Following Statements Is False

question 37

Multiple Choice

Which of the following statements is false?

• A)With all-equity companies,the rate of return to shareholders is always equal to the rate of return on assets.
• B)With debt,the rate of return to shareholders is always equal to the rate of return on assets providing the rate of return on assets is equal to the interest rate.
• C)If the rate of return on assets is greater than the interest on debt,then leverage results in lower rates of return on equity.
• D)If the rate of return on assets is less than the interest rate on debt,then leverage results in lower rates of return on equity.

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Definitions:

Sherman Act

A landmark federal statute in the field of United States antitrust law passed by Congress in 1890 to prohibit monopolistic business practices.

Monopoly Power

Monopoly power refers to the ability of a single seller or company to control the market for a particular good or service, allowing it to set prices above competitive levels.

Unreasonably Restrain

To limit or control someone or something to an excessive or unjustifiable extent, typically in a legal or regulatory context.