Which of the Following Statements Is False

question 46

Multiple Choice

Which of the following statements is false?

• A) Because insurance reduces the risk of financial distress, it can relax this tradeoff and allow the firm to increase its use of debt financing.
• B) By lowering the volatility of the stock, insurance discourage concentrated ownership by an outside director or investor who will monitor the firm and its management.
• C) When a firm is subject to graduated income tax rates, insurance can produce a tax savings if the firm is in a higher tax bracket when it pays the premium than the tax bracket it is in when it receives the insurance payment in the event of a loss.
• D) In a perfect market without other frictions, insurance companies should compete until they are just earning a fair return and the NPV from selling insurance is zero. The NPV is zero if the price of insurance equals the present value of the expected payment; in that case, we say the price is actuarially fair.

Recognize the importance and fundamentals of taxonomy in biology.

Distinguish between prokaryotic and eukaryotic organisms and their characteristics.

Understand the diversity of life and the criteria for classifying organisms into specific taxa.

Identify the roles of producers, consumers, and decomposers within ecosystems.

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Definitions:

Absolute Advantage

The ability of an individual, company, or country to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

Production Possibility Frontiers

A curve depicting all maximum output possibilities for two or more goods, given a set of inputs.

Wheat

A cereal grain that is a worldwide staple food, grown in countless varieties.

Cattle

Domesticated bovine animals that are raised for various purposes including meat (beef and veal), dairy products, leather, and as draught animals.