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:

Integrity

The quality of being honest and having strong moral principles, or moral uprightness.

Fairly

In a just, equitable, and unbiased manner, ensuring impartial treatment or judgment.

Ethical Screen

A filter or guideline used to assess decisions, actions, or investments based on moral principles or standards.

Ethical Mind

A point of view that helps the individual aspire to good work that matters to their colleagues, companies, and society in general.