Which of the Following Statements Is FALSE

question 19

Multiple Choice

Which of the following statements is FALSE?

• A)In a perfect market without other frictions, insurance companies should compete until they are just earning a fair return and the NPV from selling insurance is zero. The NPV is zero if the price of insurance equals the present value of the expected payment; in that case, we say the price is 'actuarially fair'.
• B)Because insurance reduces the risk of financial distress, it can relax this trade-off and allow the firm to increase its use of debt financing.
• C)When a firm is subject to graduated income tax rates, insurance can produce a tax saving if the firm is in a higher tax bracket when it pays the premium than the tax bracket it is in when it receives the insurance payment in the event of a loss.
• D)By lowering the volatility of the shares, insurance discourages concentrated ownership by an outside director or investor who will monitor the firm and its management.

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Definitions:

Sex-Related Thoughts

Mental activities or considerations specifically related to sexual desires, attractions, or activities.

Vaginal Penetration

The insertion of an object, body part, or genitalia into the vagina, a common aspect of sexual intercourse.

Erectile Dysfunction

A medical condition in males characterized by the inability to achieve or maintain an erection suitable for sexual intercourse.

National Survey

A comprehensive, large-scale examination or inquiry conducted across a nation to gather statistical data or insights about the population on various topics.