Which of the Following Statements Is False

question 49

Multiple Choice

Which of the following statements is false?

• A) If the debt-equity ratio changes over time, the risk of equity - and, therefore, its cost of capital - will change as well.
• B) The FTE method can offer an advantage when calculating the value of equity for the entire firm, if the firm's capital structure is complex and the market values of other securities in the firm's capital structure are not known.
• C) The FTE approach does not have the same disadvantage associated with the APV approach: we don't need to compute the project's debt capacity to determine interest and net borrowing before we can make the capital budgeting decision.
• D) The WACC and APV methods compute the firm's enterprise value, so that a separate valuation of the other components of the firm's capital structure is needed to determine the value of equity.

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Definitions:

Strange Situation

A standardized research protocol used in psychology to assess attachment relationships between infants and their caregivers.

Anxious

Feeling worry, nervousness, or unease about something with an uncertain outcome.

Strange Situation

A procedure developed by Mary Ainsworth to assess patterns of attachment by observing a child's reactions to separations and reunions with their caregiver.

Ethical Reasons

Reasons or principles that relate to what is morally right or wrong and morally good or bad.