Which of the Following Statements Is False

question 60

Multiple Choice

Which of the following statements is false?

• A) When a firm faces financial distress, creditors can gain by making sufficiently risky investments, even if they have negative NPV.
• B) When a firm has leverage, a conflict of interest exists if investment decisions have different consequences for the value of equity and the value of debt.
• C) In some circumstances, managers may take actions that benefit shareholders but harm the firm's creditors and lower the total value of the firm.
• D) Agency costs are costs that arise when there are conflicts of interest between stakeholders.

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Definitions:

Controlled Motivation

A type of motivation generated by external pressures or obligations, rather than internal interest or enjoyment in the activity itself.

N-Ach

Abbreviation for "Need for Achievement," which is the drive to excel, achieve in relation to a set of standards, and strive to succeed.

Growth Need

The requirement for personal development, learning new skills, and career advancement.

Self-Actualization

The achievement or satisfaction of one's abilities and capabilities, seen as an innate motivation or necessity in all individuals.