Which of the Following Statements Is False

question 76

Multiple Choice

Which of the following statements is false?

• A) As long as the firm's choice of securities does not change the cash flows generated by its assets, the capital structure decision will not change the total value of the firm or the amount of capital it can raise.
• B) If securities are fairly priced, then buying or selling securities has an NPV of zero and, therefore, should not change the value of a firm.
• C) The future repayments that the firm must make on its debt are equal in value to the amount of the loan it receives up front.
• D) An investor who would like more leverage than the firm has chosen can lend and add leverage to his or her own portfolio.

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Definitions:

Direct Labor

The workforce engaged directly in the manufacturing process, whose wages are considered part of the production cost.

Sales Activity

The actions and processes involved in the selling of goods or services, including promotion, negotiation, and distribution.

Ending Work in Process

The value of partially completed goods at the end of an accounting period, comprising material, labor, and overhead costs.

Finished Goods Inventory

Unsold goods that are available and ready for purchase in the market.