Which of the Following Statements Is FALSE

question 93

Multiple Choice

Which of the following statements is FALSE?

• A)If there is uncertainty regarding EBIT,then with a higher interest expense there is a greater risk that interest will exceed EBIT.
• B)Even for a firm with positive earnings,growth will affect the optimal leverage ratio.
• C)From a tax perspective,the firm's optimal level of debt is proportional to its current earnings.
• D)The optimal proportion of debt in the firm's capital structure will be higher,the higher the firm's growth rate.

---

Definitions:

Government Standards

Regulations established by the government to dictate the minimum acceptable levels of safety, quality, or performance for products, services, or actions.

Emission Reductions

The process or policy of reducing the amount of pollutants released into the atmosphere, typically to combat pollution and climate change.

Externality Compensation

Payments or remedies provided to offset the unintended negative or positive effects imposed on third parties by the production or consumption of goods and services.

Efficient Outcome

An allocation of resources in which it is impossible to make any one individual better off without making at least one individual worse off.