Which of the Following Statements Is False

question 13

Multiple Choice

Which of the following statements is false?

• A) With zero taxes and zero bankruptcy costs, the value of the firm is independent of its debt-equity ratio.
• B) With taxes and zero bankruptcy costs, the value of the firm reaches a maximum and then declines as the debt-equity ratio increases.
• C) With taxes and bankruptcy costs, the value of the firm reaches a maximum and then declines as the debt-equity ratio increases.

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Definitions:

Personal Constructs

A theory focusing on how individuals perceive, interpret, and predict events in the world through personal mental models.

Humanistic Theory

A psychological perspective emphasizing individual potential, self-growth, and self-actualization, often associated with psychologists such as Abraham Maslow and Carl Rogers.

Schizophrenics

Individuals diagnosed with schizophrenia, a mental disorder characterized by distortions in thinking, perception, emotions, language, sense of self, and behavior.

Cognitive Information-Processing

A psychological approach that focuses on understanding how people process, store, and use information in their minds.