Which of the Following Statements Is FALSE

question 42

Multiple Choice

Which of the following statements is FALSE?

• A)Personal taxes have the potential to offset some of the corporate tax benefits of leverage.
• B)The actual interest tax shield depends on the reduction in the total taxes (both corporate and personal)that are paid.
• C)The amount of money an investor will pay for a security ultimately depends on the benefits the investor will receive-namely,the cash flows the investor will receive before all taxes have been paid.
• D)Just like corporate taxes,personal taxes reduce the cash flows to investors and diminish firm value.

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Definitions:

Nominal

Refers to a type of variable that represents categories with no intrinsic order or ranking.

Ordinal

A scale of measurement where numbers represent ordered categories that have a meaningful sequence, but the intervals between the categories are not necessarily equal.

Ratio Scales

Ratio scales are a type of measurement scale that not only have order and equal intervals but also have a true zero point, allowing for the calculation of ratios.

"True" Zero

A point on a scale of measurement that represents a complete absence of the property being measured, as opposed to a mere baseline or reference point.