Which of the Following Statements Is False

question 71

Multiple Choice

Which of the following statements is false?

• A) Given a 35% corporate tax rate, for every $1 in new permanent debt that the firm issues, the value of the firm increases by $0.65.
• B) The firm's marginal tax rate may fluctuate due to changes in the tax code and changes in the firm's income bracket.
• C) Many large firms have a policy of maintaining a certain amount of debt on their balance sheets.
• D) Typically, the level of future interest payments varies due to changes the firm makes in the amount of debt outstanding, changes in the interest rate on that debt, and the risk that the firm may default and fail to make an interest payment.

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Definitions:

Tong

An organization or society, often referring to Chinese secret societies or fraternal organizations, some of which were involved in criminal activities.

Privity of Contract

A legal concept indicating that contracts are binding only upon the parties signing the contract, excluding any third parties.

Insurance Contract

A legally binding agreement between an insurer and the insured, outlining the terms for premium payment and the conditions under which the insurer will compensate the insured.

Goods

Tangible, movable personal property that can be measured and weighed; also known as chattels.