Which of the Following Statements Is FALSE

question 38

Multiple Choice

Which of the following statements is FALSE?

• A)Creditors often place restrictions on the actions that the firm can take.Such restrictions are referred to as debt covenants.
• B)Covenants are often designed to prevent management from exploiting debt holders,so they may help to reduce agency costs.
• C)Agency costs are smallest for long-term debt.
• D)Covenants may limit the firm's ability to pay large dividends or the types of investments that the firm can make.

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Definitions:

Diverse Occupations

A broad range of job roles and career paths within various sectors, showcasing a variety in skill sets, responsibilities, and employment conditions.

Democratic Practices

The implementation and adherence to democratic principles and methods in the operation and decision-making processes of organizations or institutions, ensuring participatory engagement and fairness.

Specialized Functions

Tasks or operations that require specific skills, knowledge, or expertise, often within a particular field or profession.

Formalized Procedures

Official, established methods of operation or processes followed in organizations.