Which of the Following Statements Is FALSE

question 27

Multiple Choice

Which of the following statements is FALSE?

• A)As long as the firm's choice of securities does not change the cash flows generated by its assets,the capital structure decision will not change the total value of the firm or the amount of capital it can raise.
• B)If securities are fairly priced,then buying or selling securities has an NPV of zero and,therefore,should not change the value of a firm.
• C)The future repayments that the firm must make on its debt are equal in value to the amount of the loan it receives up front.
• D)An investor who would like more leverage than the firm has chosen can lend and add leverage to his or her own portfolio.

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Definitions:

Purging Behavior

Actions undertaken to rid the body of consumed food or substances, often associated with eating disorders such as bulimia nervosa.

Laxative

A substance used to stimulate bowel movements, often used to treat constipation.

Bulimia Nervosa

An eating disorder marked by binge eating followed by methods to avoid weight gain, such as self-induced vomiting.

Binge Eating Disorder

An eating disorder marked by periods of uncontrolled, excessive eating, followed by feelings of shame or guilt.