Which of the Following Statements Is False

question 45

Multiple Choice

Which of the following statements is false?

• A) In perfect capital markets, buying and selling securities is a zero-NPV transaction, so it should not affect firm value.
• B) Making positive-NPV investments will create value for the firm's investors, whereas saving the cash or paying it out will not.
• C) In perfect capital markets, if a firm invests excess cash flows in financial securities, the firm's choice of payout versus retention is irrelevant and does not affect the initial share price.
• D) After adjusting for investor taxes, there remains a substantial tax advantage for the firm to retain excess cash.

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Definitions:

Two-wire Control

A control system that utilizes two conductors to connect an electrical device to a power source for operation.

Mechanically Held

Describes devices or components that are kept in position through mechanical means rather than magnetic or adhesive forces.

Electrician

A skilled tradesperson who installs, maintains, and repairs electrical power systems and equipment.

Pilot Device

A device used to control or manipulate the operation of electrical machines through minor input adjustments.