Which of the Following Statements Is False

question 64

Multiple Choice

Which of the following statements is false?

• A) Even after adjusting for personal taxes, the value of an unlevered firm exceeds the value of a levered firm, and there is a tax advantage to using debt financing.
• B) In Modigliani and Miller's setting of perfect capital markets, firms could use any combination of debt and equity to finance their investments without changing the value of the firm.
• C) When firms raise new capital from investors, they do so primarily by issuing debt.
• D) In most years aggregate equity issues are negative, meaning that firms are reducing the amount of equity outstanding by buying shares.

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Definitions:

High Profitability

A situation where businesses or investments return a significantly higher profit relative to their costs.

Customer Service

The support and assistance provided by a company to those who purchase or use its products or services, aiming to ensure customer satisfaction.

Outbound Transportation Costs

Expenses related to the shipping of finished goods from the manufacturer or warehouse to the end user or customer.

Sourcing Transportation

The process of identifying, selecting, and managing the logistics of moving goods from their point of origin to their final destination.