Which of the Following Statements Is False

question 17

Multiple Choice

Which of the following statements is false?

• A) One disadvantage of using leverage is that it does not allow the original owners of the firm to maintain their equity stake.
• B) The separation of ownership and control creates the possibility of management entrenchment; facing little threat of being fired and replaced, managers are free to run the firm in their own best interests.
• C) Managers also have their own personal interests, which may differ from those of both equity holders and debt holders.
• D) The costs of reduced effort and excessive spending on perks are another form of agency cost.

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Definitions:

Federal Government

The national government of a federation, which holds the authority to govern a country and regulates the common interests of its constituent states or provinces.

Radical Reconstruction

The period after the American Civil War when the Republican Party implemented measures to rebuild and reform the Southern states, including granting civil rights to freed slaves.

African-Americans

A racial or ethnic group in the United States with ancestry from any of the black racial groups of Africa.

Grievances

Complaints or formal expressions of dissatisfaction, often against an authority or institution.