Which of the Following Statements Is FALSE

question 93

Multiple Choice

Which of the following statements is FALSE?

• A)If there is uncertainty regarding EBIT,then with a higher interest expense there is a greater risk that interest will exceed EBIT.
• B)Even for a firm with positive earnings,growth will affect the optimal leverage ratio.
• C)From a tax perspective,the firm's optimal level of debt is proportional to its current earnings.
• D)The optimal proportion of debt in the firm's capital structure will be higher,the higher the firm's growth rate.

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Definitions:

Powerful Stakeholders

Individuals or groups that hold significant influence, resources, or power within or outside an organization, affecting its decisions and actions.

Collective Responsibility

Collective responsibility is the doctrine or principle that each member of a group shares responsibility for the actions or outcomes of the group as a whole, emphasizing mutual accountability.

Mediating Variables

Variables that explain the relationship between two other variables, usually serving as an intermediary or mechanism through which an effect occurs.

Heroic Individual Leaders

The concept that leaders are exceptional individuals, possessing unique traits that enable them to influence and direct others effectively, often single-handedly overcoming obstacles.