Which of the Following Statements Is False

question 34

Multiple Choice

Which of the following statements is false?

• A) If there is uncertainty regarding EBIT, then with a higher interest expense there is a greater risk that interest will exceed EBIT.
• B) Even for a firm with positive earnings, growth will affect the optimal leverage ratio.
• C) From a tax perspective, the firm's optimal level of debt is proportional to its current earnings.
• D) The optimal proportion of debt in the firm's capital structure will be higher, the higher the firm's growth rate.

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Definitions:

Fur Trade

The historical trade and exchange of animal pelts (primarily beaver, fox, and mink) driven by demand for fur clothing and accessories.

Millions of Acres

refers to a vast expanse of land, often used in the context of land ownership, agriculture, or conservation to denote a very large area.

Dutch Empire

Was a collection of territories controlled by the Netherlands from the 17th to the 20th centuries, notably in the Americas, Africa, Asia, and Australia, known for its trade networks and colonial activities.

Formal Treaty

A legally binding agreement between two or more sovereign states or international entities, often ratified by the respective parties' legislative bodies.