Which of the Following Statements Is FALSE

question 19

Multiple Choice

Which of the following statements is FALSE?

• A)Investors can alter the leverage choice of the firm to suit their personal tastes either by borrowing and reducing leverage or by holding bonds and adding more leverage.
• B)On the market value balance sheet the total value of all securities issued by the firm must equal the total value of the firm's assets.
• C)The market value balance sheet captures the idea that value is created by a firm's choice of assets and investments.
• D)One application of MM Proposition I is the useful device known as the market value balance sheet of the firm.

---

Definitions:

Incremental Cash Flows

The additional cash flow a business receives from taking on a new project, used to analyze the profitability of that project.

Investment Requirement

The total capital and resources needed for a project, investment, or venture to proceed.

Time Value

The concept that money available today is worth more than the same amount in the future due to its potential earning capacity.

Payback Period

The time it takes for an investment to generate income or revenue equal to its cost, used to assess the feasibility or risk of an investment.