Which of the Following Statements Is FALSE

question 38

Multiple Choice

Which of the following statements is FALSE?

• A)Creditors often place restrictions on the actions that the firm can take.Such restrictions are referred to as debt covenants.
• B)Covenants are often designed to prevent management from exploiting debt holders,so they may help to reduce agency costs.
• C)Agency costs are smallest for long-term debt.
• D)Covenants may limit the firm's ability to pay large dividends or the types of investments that the firm can make.

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Definitions:

Perversion

A deviation from what is considered normal or acceptable behavior, often with negative connotations relating to sexual behavior.

Hispanic

Relating to Spain or Spanish-speaking countries, especially those of Latin America. In the United States, often used to describe people of Spanish-speaking descent.

Native American

Indigenous peoples of the United States, including American Indians and Alaska Natives, with distinct cultural heritages, languages, and historical identities.

Class Shaming

The act of ridiculing or demeaning individuals based on their social class, often highlighting economic disparities and perpetuating stereotypes and discrimination.