Which of the Following Statements Is False

question 1

Multiple Choice

Which of the following statements is false?

• A) Creditors often place restrictions on the actions that the firm can take. Such restrictions are referred to as debt covenants.
• B) Covenants are often designed to prevent management from exploiting debt holders, so they may help to reduce agency costs.
• C) Agency costs are smallest for long-term debt.
• D) Covenants may limit the firm's ability to pay large dividends or the types of investments that the firm can make.

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Definitions:

Baroreceptors

Sensory nerve endings present in the walls of blood vessels and the heart that detect changes in blood pressure and help regulate it.

ADH Secretion

The release of Antidiuretic Hormone, which helps regulate water balance in the body by increasing water reabsorption in the kidneys.

Elevated Blood Pressure

A condition characterized by higher than normal pressure exerted by circulating blood against the walls of the arteries, also known as hypertension.

Blood Osmolality

A measure of the concentration of solutes in the blood, influencing the movement of water between body compartments.