Which of the Following Statements Regarding Recapitalizations Is False

question 17

Multiple Choice

Which of the following statements regarding recapitalizations is false?

• A) With a recapitalization, even though leverage reduces the total value of equity, shareholders capture the benefits of the interest tax shield up front.
• B) The share price rises after the completion of the recapitalization.
• C) Leveraged recaps were especially popular in the mid- to late-1980s, when many firms found that these transactions could reduce their tax payments.
• D) When a firm makes a significant change to its capital structure, the transaction is called a recapitalization.

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Definitions:

Occupational Stress

The stress experienced as a result of job-related pressures and challenges which can affect performance and well-being.

Robert Karasek

A social psychologist best known for his work on job strain and the demand-control model, which discusses the effects of occupational stress on health.

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