Which of the Following Statements Is False

question 99

Multiple Choice

Which of the following statements is false?

• A) The most important insight regarding capital structure goes back to Modigliani and Miller: With perfect capital markets, a firm's security choice alters the risk of the firm's equity, but it does not change its value or the amount it can raise from outside investors.
• B) When agency costs are significant, short-term debt may be the most attractive form of external financing.
• C) Too much debt can motivate managers and equity holders to take excessive risks or over-invest in a firm.
• D) Of all the different possible imperfections that drive capital structure, the most clear-cut, and possibly the most significant, is taxes.

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Definitions:

Alpine Tundra

A biome found in the high mountain regions of the world, above the tree line, characterized by windswept landscapes, low temperatures, and minimal vegetation.

Tree Line

The highest elevation or latitude line beyond which trees are unable to grow due to unsuitable environmental conditions, such as cold temperatures or lack of moisture.

Snow Line

The lowest altitude area on a mountain where snow remains throughout the year.

Region's Climate

The average weather patterns and conditions typically experienced in a specific geographic region over a long period.