Which of the Following Statements Is False

question 64

Multiple Choice

Which of the following statements is false?

• A) Even after adjusting for personal taxes, the value of an unlevered firm exceeds the value of a levered firm, and there is a tax advantage to using debt financing.
• B) In Modigliani and Miller's setting of perfect capital markets, firms could use any combination of debt and equity to finance their investments without changing the value of the firm.
• C) When firms raise new capital from investors, they do so primarily by issuing debt.
• D) In most years aggregate equity issues are negative, meaning that firms are reducing the amount of equity outstanding by buying shares.

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Definitions:

Infants

Legally refers to individuals who are under the age of majority, typically below 18 years, and are often considered incapable of entering into certain contracts or agreements.

Contract Law

The body of law that governs the creation and enforcement of agreements between parties.

Canada

A country in North America consisting of 10 provinces and 3 territories, known for its vast landscapes and multicultural diversity.

Enforceable

A legal term describing a contract or obligation that is recognized by law and can be upheld in a court of law.