Which of the Following Statements Is FALSE

question 93

Multiple Choice

Which of the following statements is FALSE?

• A) Since the publication of their original paper, Modigliani and Miller's ideas have greatly influenced finance research and practice.
• B) Proposition I was one of the first arguments to show that the Law of One Price could have strong implications for security prices and firm values in a competitive market; it marks the beginning of the modern theory of corporate finance.
• C) The conservation of value principle extends far beyond questions of debt versus equity or even capital structure.
• D) The conservation of value principle for financial markets states that with perfect capital markets, financial transactions neither add nor destroy value, but instead represent a repackaging of risk (and therefore return).

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Definitions:

Domestic Industry

Industries that produce goods and services within a country’s borders, as opposed to foreign or international markets.

Quota

Limit set on the amounts of particular products that can be imported.

Dumping

Selling products abroad at prices below production costs or below typical prices in the home market to capture market share from domestic competitors.

Cost of Production

The total expenses incurred in the production of goods or services, including raw materials, labor, and overheads.