Which of the Following Statements Is False

question 17

Multiple Choice

Which of the following statements is false?

• A) One disadvantage of using leverage is that it does not allow the original owners of the firm to maintain their equity stake.
• B) The separation of ownership and control creates the possibility of management entrenchment; facing little threat of being fired and replaced, managers are free to run the firm in their own best interests.
• C) Managers also have their own personal interests, which may differ from those of both equity holders and debt holders.
• D) The costs of reduced effort and excessive spending on perks are another form of agency cost.

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Definitions:

ATP

Adenosine triphosphate, the primary energy carrier in all living organisms, providing the energy needed for many cellular processes.

Polypeptide Chains

Long chains of amino acids linked by peptide bonds, which fold into specific three-dimensional shapes to form proteins.

Ribosome

A cellular organelle that functions as the site of protein synthesis, reading RNA sequences to assemble amino acids into proteins.

Golgi Body

Membrane-enclosed organelle that modifies proteins and lipids, then sorts the finished products into vesicles. Shaped like a stack of pancakes.