Which of the Following Statements Is FALSE

question 20

Multiple Choice

Which of the following statements is FALSE?

• A)One disadvantage of using leverage is that it does not allow the original owners of the firm to maintain their equity stake.
• B)The separation of ownership and control creates the possibility of management entrenchment;facing little threat of being fired and replaced,managers are free to run the firm in their own best interests.
• C)Managers also have their own personal interests,which may differ from those of both equity holders and debt holders.
• D)The costs of reduced effort and excessive spending on perks are another form of agency cost.

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Definitions:

Hotlines

Dedicated telephone or online services that provide immediate support and resources for people in distress.

Brain-Circuit Dysfunction

Irregularities or impairments in the neural circuits which can lead to various cognitive, emotional, and behavioral disorders.

High Serotonin

A condition where there is an excessive amount of serotonin, a neurotransmitter, in the brain, which can affect mood, emotions, and overall mental health.

Low Norepinephrine

A condition where there is a deficiency of the neurotransmitter norepinephrine in the body, which can affect mood and concentration.