Which of the Following Statements Is FALSE

question 44

Multiple Choice

Which of the following statements is FALSE?

• A) The more cash a firm uses to repurchase shares, the less it has available to pay dividends.
• B) Free cash flow measures the cash generated by a firm after payments to debt or equity holders are considered.
• C) We estimate a firm's current enterprise value by computing the present value (PV) of the firm's free cash flow.
• D) We can interpret the enterprise value of a firm as the net cost of acquiring the firm's equity, taking its cash, and paying off all debts.

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Definitions:

Rent Control

Government policies or laws that limit the amount landlords can charge for leasing a home or renewing a lease to protect tenants from sharp increases.

Price Ceiling

A government-imposed limit on the price charged for a product or service, intended to prevent prices from rising to levels considered too high for consumers.

Price Floor

A government- or group-imposed price control or limit on how low a price can be charged for a product, service, or commodity.

Equilibrium Price

The market price where the quantity of goods supplied equals the quantity demanded, resulting in market balance.