Which of the Following Statements Is False

question 60

Multiple Choice

Which of the following statements is false?

• A) The money taken in by the firm as a result of the share issue exactly offsets the dilution of the shares.
• B) Most analysts prefer to use performance measures and valuation multiples that are based on the firm's earnings before interest has been deducted.
• C) The fact that the firm's earnings per share and price-earnings ratio are affected by leverage implies that we can always reliably compare these measures across firms with different capital structures.
• D) In general, as long as the firm sells the new shares of equity at a fair price, there will be no gain or loss to shareholders associated with the equity issue itself.

---

Definitions:

Dot Coms

Companies that operate primarily on the internet, often associated with the tech boom and bubble of the late 1990s and early 2000s.

Defense of Marriage Act

A U.S. federal law enacted in 1996 that allowed states to refuse to recognize same-sex marriages granted under the laws of other states, declared unconstitutional in part by the Supreme Court in 2013.

Contract with America

A document released by the United States Republican Party during the 1994 congressional election campaign, outlining the party's legislative agenda meant to reform the federal government.

Globalization

The process of interaction and integration among people, companies, and governments worldwide, often driven by international trade and investment and aided by information technology.