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:

General Parts

The typical or essential component sections of a document, presentation, or any structured form of communication.

Short Reports

Concise documents that present information on a specific topic, typically structured to facilitate quick reading and understanding.

Internal Proposal

A document or plan proposed within an organization, aiming to address and provide solutions to internal issues or projects.

External Proposal

An external proposal is a formal suggestion or plan submitted to an organization or individual outside one's own company, often seeking approval, funding, or partnership.