Which of the Following Statements Is False

question 45

Multiple Choice

Which of the following statements is false?

• A) In perfect capital markets, buying and selling securities is a zero-NPV transaction, so it should not affect firm value.
• B) Making positive-NPV investments will create value for the firm's investors, whereas saving the cash or paying it out will not.
• C) In perfect capital markets, if a firm invests excess cash flows in financial securities, the firm's choice of payout versus retention is irrelevant and does not affect the initial share price.
• D) After adjusting for investor taxes, there remains a substantial tax advantage for the firm to retain excess cash.

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Definitions:

Therapist

A professional trained to treat emotional, mental, and behavioral disorders through various psychological techniques and therapies.

Warn

To inform someone about a possible danger, problem, or other unpleasant situation, typically to prevent or minimize damage.

Involuntary Commitment

The process by which individuals are admitted to a psychiatric hospital or ward against their will due to danger to themselves or others.

Medication

Substances used to diagnose, treat, or prevent disease and improve health in humans or animals, often in the form of drugs or pharmaceuticals.