Which of the Following Statements Is FALSE

question 61

Multiple Choice

Which of the following statements is FALSE?

• A)Once investors know the recap will occur,the share price will rise immediately to a level that reflects the value of the interest tax shield that the firm will receive from its recapitalization.
• B)When securities are fairly priced,the original shareholders of a firm capture the full benefit of the interest tax shield from an increase in leverage.
• C)In the presence of corporate taxes,we do not include the interest tax shield as one of the firm's assets on its market value balance sheet.
• D)We can analyze the recapitalization using the market value balance sheet;it states that the total market value of a firm's securities must equal the total market value of the firm's assets.

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Definitions:

Human Relations Movement

A management approach emphasizing the importance of social dynamics, employee welfare, and the human needs in the workplace for enhancing productivity.

Classical Management Approach

A theory that emphasizes a structured, formal network of relationships among specialized positions in order to accomplish organizational goals.

Social Concerns

involve issues that affect society as a whole, including poverty, inequality, and environmental protection.

Worker Satisfaction

The level of contentment employees feel about their job roles, workplace environment, and organizational policies, influencing their productivity and loyalty.