Which of the Following Statements Is False

question 3

Multiple Choice

Which of the following statements is false?

• A) Rather than set debt according to a target debt-equity ratio or interest coverage level, a firm may adjust its debt according to a fixed schedule that is known in advance.
• B) When we relax the assumption of a constant debt-equity ratio, the equity cost of capital and WACC for a project will change over time as the debt-equity ratio changes.
• C) When we relax the assumption of a constant debt-equity ratio, the APV and FTE methods are difficult to implement.
• D) If a firm is using leverage to shield income from corporate taxes, then it will adjust its debt level so that its interest expenses grow with its earnings.

Interpret decision trees in the context of finance and decision-making.

Learn to perform basic statistical analyses using PHStat, including calculating coefficients of variation.

Understand the relationship between risk and correlation in portfolio management.

Learn to calculate variance of financial instruments.

---

Definitions:

False Positive

An error in data reporting in which a test result improperly indicates the presence of a condition (like a disease) when it is not actually present.

Eyewitnesses

Individuals who have directly seen an event or crime take place and can provide testimony about what they observed.

Testimony

An oral or written statement that a person gives based on their personal knowledge, experience, or observation, often used as evidence in courts.

Serial Position Effect

A cognitive phenomenon whereby items at the beginning and end of a list are more likely to be remembered than those in the middle.