Which of the Following Statements Is FALSE

question 41

Multiple Choice

Which of the following statements is FALSE?

• A)Aside from taxes,another important difference between debt and equity financing is that debt payments must be made to avoid bankruptcy,whereas firms have no similar obligation to pay dividends or realize capital gains.
• B)Increasing the level of debt increases the probability of bankruptcy.
• C)A firm receives a tax benefit only if it is paying taxes in the first place.
• D)To the extent that a firm has other tax shields,its taxable earnings will be increased and it will rely more heavily on the interest tax shield.

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Definitions:

Negotiation

The process of discussing and reaching an agreement between two or more parties, each with its own interests and objectives.

Mediation

A confidential and voluntary process involving a neutral third party to help resolve disputes or conflicts.

Wrongful Dismissal

A lawsuit filed in a court by an employee alleging that he or she was dismissed without proper contractual or “reasonable” notice.

Reasonable Notice

The period of notice that an employer is legally required to give an employee before terminating their employment, or that an employee should give an employer before resigning.