Which of the Following Statements Is FALSE

question 40

Multiple Choice

Which of the following statements is FALSE?

• A)While debt itself may be cheap,it increases the risk and therefore the cost of capital of the firm's equity.
• B)Although debt does not have a lower cost of capital than equity,we can consider this cost in isolation.
• C)We can use Modigliani and Miller's first proposition to derive an explicit relationship between leverage and the equity cost of capital.
• D)The total market value of the firm's securities is equal to the market value of its assets,whether the firm is unlevered or levered.

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Definitions:

Health Prevention

Strategies or practices that aim to reduce or eliminate the occurrence of diseases and health problems before they happen.

Conditional Guarantor

A guarantor who promises to fulfill the obligations if certain conditions are met.

Legal Procedures

The official processes and methods used within the judicial system to ensure the legal rights of individuals are upheld.

Principal Debtor

The primary individual or entity responsible for repaying a debt or obligation in a lending agreement.