Which of the Following Statements Is False

question 72

Multiple Choice

Which of the following statements is false?

• A) Modigliani and Miller's conclusion verified the common view, which stated that even with perfect capital markets, leverage would affect a firm's value.
• B) We can evaluate the relationship between risk and return more formally by computing the sensitivity of each security's return to the systematic risk of the economy.
• C) Investors in levered equity require a higher expected return to compensate for its increased risk.
• D) Leverage increases the risk of equity even when there is no risk that the firm will default.

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Definitions:

ReadLine

A method used to read a line of text from a buffer or stream, often associated with BufferedReader in Java.

Null

A special marker used in programming to indicate that a variable does not hold any valid data or object reference.

WriteUTF

A method in Java for writing a string to an output stream in a modified UTF-8 format.

Flush

To flush means to clear a buffer in computing, forcing any buffered but not yet written data to be written to its destination, such as a file or a network.