Which of the Following Statements Is FALSE

question 57

Multiple Choice

Which of the following statements is FALSE?

• A)The tradeoff theory weighs the costs of debt that result from shielding cash flows from taxes against the benefits from the effects of financial distress associated with leverage.
• B)Leverage has costs as well as benefits.
• C)According to the tradeoff theory,the total value of a levered firm equals the value of the firm without leverage plus the present value of the tax savings from debt,less the present value of financial distress costs.
• D)Firms have an incentive to increase leverage to exploit the tax benefits of debt.But with too much debt,they are more likely to risk default and incur financial distress costs.

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Definitions:

Violence

Behavior involving physical force intended to hurt, damage, or kill someone or something.

Unconscious Conflicts

Internal struggles within the mind that occur without the individual's awareness, often influencing behavior and emotions.

Behaviorists

Psychologists who focus on observable behaviors and the ways in which learning influences behavior, often excluding thoughts and feelings from their study.

Anxiety

A mental health disorder characterized by feelings of worry, anxiety, or fear that are strong enough to interfere with one's daily activities.