Which of the Following Statements Is FALSE

question 95

Multiple Choice

Which of the following statements is FALSE?

• A)Even though firms have not issued new equity,the market value of equity has risen over time as firms have grown.
• B)While firms seem to prefer debt when raising external funds,not all investment is externally funded.
• C)To receive the full tax benefits of leverage a firm needs to use 100% debt financing.
• D)If bankruptcy is costly,these costs might offset the tax advantages of debt financing.

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Definitions:

Ordinal Data

Data classified into categories within a specific order or ranking, but without meaningful mathematical differences between those rankings.

Type II Error

The error that occurs when the null hypothesis is not rejected when it is actually false, also known as a false negative result.

Type I Error

Mistakenly refusing a true null hypothesis, popularly known as a "false positive."

Nominal Data

Data that are categorized into distinct groups without implying any ranked order among them.