Which of the Following Statements Is False

question 60

Multiple Choice

Which of the following statements is false?

• A) When a firm faces financial distress, creditors can gain by making sufficiently risky investments, even if they have negative NPV.
• B) When a firm has leverage, a conflict of interest exists if investment decisions have different consequences for the value of equity and the value of debt.
• C) In some circumstances, managers may take actions that benefit shareholders but harm the firm's creditors and lower the total value of the firm.
• D) Agency costs are costs that arise when there are conflicts of interest between stakeholders.

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Definitions:

Openness

indicates a willingness to receive new ideas and experiences, often linked to creativity and adaptability.

Feedback

The process of giving, receiving, and utilizing information or opinions about performances, products, or services to improve or adjust them.

Resentment

A feeling of displeasure or indignation resulting from unfair treatment or wrongs experienced.

Information Technology

The study, design, development, implementation, support, or management of computer-based information systems, particularly software applications and computer hardware.