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:

Productive Resource

A Productive Resource is any input used in the production of goods or services, including labor, capital, and natural resources.

Aggregate Demand Curve

A visual depiction that illustrates the connection between the general level of prices and the aggregate demand for goods and services within an economy.

Price Level

The mean value of current prices for all goods and services produced within an economy, commonly utilized as a gauge for inflation.

Potential Level

An economic term referring to the highest level of output an economy can achieve when utilizing all its resources efficiently without triggering inflation.