Which of the Following Statements Is FALSE

question 27

Multiple Choice

Which of the following statements is FALSE?

• A) As long as a firm's choice of securities does not change the cash flows generated by its assets, the capital structure decision will not change the total value of the firm or the amount of capital it can raise.
• B) If securities are fairly priced, then buying or selling securities has a net present value (NPV) of zero and, therefore, should not change the value of a firm.
• C) The future repayments that the firm must make on its debt are equal in value to the amount of the loan it receives up front.
• D) An investor who would like more leverage than the firm has chosen can lend and add leverage to his or her own portfolio.

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Definitions:

Aversion Therapy

Aversion therapy is a form of psychological treatment in which the patient is exposed to a stimulus while simultaneously being subjected to some form of discomfort, with the aim of creating a negative association to reduce or eliminate a problematic behavior.

Cognitive Therapy

A form of psychotherapy that emphasizes the role of thought processes in the development and maintenance of psychological disorders.

Cognitive Therapy

A form of psychotherapy that aims to change negative patterns of thinking, helping to alter unwanted behavior and emotions.

Maladaptive Beliefs

Irrational or unrealistic thoughts and attitudes that prevent an individual from adjusting healthily to life situations.