Which of the Following Statements Is FALSE

question 16

Multiple Choice

Which of the following statements is FALSE?

• A)The investor can re-create the payoffs of unlevered equity by borrowing and using the proceeds to purchase the equity of the firm.
• B)When investors use leverage in their own portfolios to adjust the leverage choice made by the firm, we say that they are using homemade leverage.
• C)The value of the firm is determined by the present value (PV)of the cash flows from its current and future investments.
• D)As long as investors can borrow or lend at the same interest rate as the firm, homemade leverage is a perfect substitute for the use of leverage by the firm.

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Definitions:

Common Goal

A unified objective pursued by members of a team or organization, fostering collaboration and shared purpose.

Influences

Forces or factors that affect the actions, behavior, opinions, or development of someone or something.

Schedule A

Schedule A is a tax form used for reporting itemized deductions on an individual's federal income tax return, allowing taxpayers to list deductible expenses such as medical and dental expenses, taxes paid, and interest paid.

Itemized Deduction

Tax deductions that allow taxpayers to list each deductible expense they qualify for, potentially reducing taxable income.