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:

Motivational Theories

A set of theories that explain what drives individuals to initiate, direct, and persist in behaviors aimed at achieving personal goals.

Criminal Behavior

Activities that violate the laws of a society and are subject to sanctions from legal institutions.

Drug Control

The regulation, legislation, and policies designed to reduce the supply of and demand for illegal drugs and control the use of legal drugs.

United States Government

The federal government of the United States, a constitutional republic composed of three distinct branches: legislative, executive, and judicial.