Which of the Following Statements Is False

question 34

Multiple Choice

Which of the following statements is false?

• A) If there is uncertainty regarding EBIT, then with a higher interest expense there is a greater risk that interest will exceed EBIT.
• B) Even for a firm with positive earnings, growth will affect the optimal leverage ratio.
• C) From a tax perspective, the firm's optimal level of debt is proportional to its current earnings.
• D) The optimal proportion of debt in the firm's capital structure will be higher, the higher the firm's growth rate.

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Definitions:

Frontal

Pertaining to the front, often used to describe the location of structures; in brain anatomy, refers to the region associated with decision making, problem solving, and emotions.

Maxilla

One of the two large bones that form the upper jaw, serving as a foundation for the face and support for the upper teeth.

Zygomatic

Pertaining to the cheekbone or zygoma, part of the facial skeleton.

Lacrimal

Pertaining to tears and the glands that produce tears, which play a crucial role in eye health and function.