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:

Monetarists

Monetarists believe in the control of the supply of money as the primary method of controlling inflation and stabilizing the economy.

Balancing the Budget

The process of adjusting income and expenditure so that they equal each other, resulting in neither a budget deficit nor a surplus.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, bank deposits, and other liquid assets.

Expansionary Monetary Policy

A monetary policy approach used by central banks to increase the money supply and lower interest rates, aiming to stimulate economic growth.