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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Legal Environment

The framework of laws, regulations, and legal processes that govern the operations of businesses and organizations within a jurisdiction.

Labor Relations

The field that studies the laws, norms, and practices regulating the interactions between employees, employers, and their respective representatives.

Injunctions

Legal orders issued by a court that either restrain a party from doing certain actions or compel them to perform specific acts.

Unions

Organizations that represent workers in various industries to negotiate with employers on wages, hours, benefits, workplace safety, and other employment terms and conditions.