Which of the Following Questions Is FALSE

question 79

Multiple Choice

Which of the following questions is FALSE?

• A)Sometimes management may believe that the securities they are issuing are priced at less than (or more than)their true value.If so,the NPV of the transaction,which is the difference between the actual money raised and the true value of the securities sold,should not be included in the value of the project.
• B)An alternative method of incorporating financial distress and agency costs is to first value the project ignoring these costs,and then value the incremental cash flows associated with financial distress and agency problems separately.
• C)When the debt level-and,therefore,the probability of financial distress-is high,the expected free cash flow will be reduced by the expected costs associated with financial distress and agency problems.
• D)If the financing of the project involves an equity issue,and if management believes that the equity will sell at a price that is less than its true value,this mispricing is a cost of the project for the existing shareholders.

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Definitions:

Union Density

A measure of the proportion of workers who are union members, usually expressed as a percentage of the total workforce.

Manufacturing

The process of producing goods and products using raw materials and machinery.

Substantive Dimension

Refers to the focus on the content or substance of industrial relations, including wages, working conditions, and employment terms.

Union Democracy

Union democracy refers to the practice and principle of democratic governance within labor unions, where decisions are made through the voting and participation of its members.