Which of the Following Statements Is FALSE

question 41

Multiple Choice

Which of the following statements is FALSE?

• A)Aside from taxes,another important difference between debt and equity financing is that debt payments must be made to avoid bankruptcy,whereas firms have no similar obligation to pay dividends or realize capital gains.
• B)Increasing the level of debt increases the probability of bankruptcy.
• C)A firm receives a tax benefit only if it is paying taxes in the first place.
• D)To the extent that a firm has other tax shields,its taxable earnings will be increased and it will rely more heavily on the interest tax shield.

---

Definitions:

Population Standard Deviation

A measure of the spread of scores within a set of data, calculated as the square root of the variance for the entire population.

Sample Size

The number of individuals or observations included in a sample drawn from a larger population for the purpose of statistical analysis.

Effect Size Formula

A statistical measure that quantifies the strength of the relationship between two variables or the size of the difference between two groups.

Sample Mean

The average value computed from a sample of data, representing the central tendency of the sample.