Which of the Following Statements Is FALSE

question 40

Multiple Choice

Which of the following statements is FALSE?

• A)While debt itself may be cheap,it increases the risk and therefore the cost of capital of the firm's equity.
• B)Although debt does not have a lower cost of capital than equity,we can consider this cost in isolation.
• C)We can use Modigliani and Miller's first proposition to derive an explicit relationship between leverage and the equity cost of capital.
• D)The total market value of the firm's securities is equal to the market value of its assets,whether the firm is unlevered or levered.

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Definitions:

Hypothalamus

A region of the brain responsible for producing hormones that regulate fundamental bodily functions, including temperature, hunger, and thirst.

Leptin

A hormone produced by fat cells that helps to regulate energy balance by inhibiting hunger.

Somatostatin

A hormone that inhibits the release of growth hormone from the anterior pituitary gland and also suppresses the release of various other hormones within the body's gastrointestinal system.

Pancreas

Internal organ that produces digestive enzymes and the hormones insulin and glucagon.