Which of the Following Statements Is FALSE

question 40

Multiple Choice

Which of the following statements is FALSE?

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

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Definitions:

Face-to-Face Meetings

Direct interactions between individuals or groups, in the same physical location, intended for communication or decision-making purposes.

Simple Email

A concise and straightforward electronic message focused on a single subject or request.

Written Channels

Communication methods that use written or typed messages, such as emails, reports, or memos, to convey information.

Spoken Channels

Means of communication that rely on verbal messages, such as conversations, speeches, or presentations.