Which of the Following Statements Is False

question 76

Multiple Choice

Which of the following statements is false?

• A) As long as the firm's choice of securities does not change the cash flows generated by its assets, the capital structure decision will not change the total value of the firm or the amount of capital it can raise.
• B) If securities are fairly priced, then buying or selling securities has an NPV of zero and, therefore, should not change the value of a firm.
• C) The future repayments that the firm must make on its debt are equal in value to the amount of the loan it receives up front.
• D) An investor who would like more leverage than the firm has chosen can lend and add leverage to his or her own portfolio.

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Definitions:

Controlled Before-after

An experimental research design that compares the outcomes of a group subjected to a treatment with its conditions prior to the treatment.

Experimental Design

A systematic method in research for conducting experiments to test hypotheses, involving manipulation of variables to assess their effects on certain outcomes.

Plagiarism

The practice of taking someone else's work or ideas and passing them off as one's own.

Pilot Study

An initial, small-scale experiment or set of observations undertaken to test the feasibility, duration, cost, risk, and adverse events in a research study, before a full-scale research project is conducted.