Which of the Following Statements Is FALSE

question 37

Multiple Choice

Which of the following statements is FALSE?

• A) Investors can alter the leverage choice of a firm to suit their personal tastes either by borrowing and reducing leverage or by holding bonds and adding more leverage.
• B) As per MM proposition II, the cost of capital of levered equity is equal to the cost of capital of unlevered equity plus a premium that is proportional to the debt-equity ratio.
• C) The MM propositions imply that the true role of a firm's financial policy is to deal with financial market imperfections such as taxes and transaction costs.
• D) In practice, we will find that capital structure can have an effect on a firm's value.

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Definitions:

Death Ignorers

Individuals or groups who believe that death is not the end of existence, but rather a transition to another state or life.

Depression-related Brain Circuit

Neural pathways in the brain that are associated with the symptoms and regulation of depression.

Significant Loss

A substantial reduction or deprivation of something valued, such as the death of a loved one, loss of a job, or end of a relationship, which can have profound emotional, psychological, or material impacts.

Geographical Location

A specific place or position described by its physical setting on the Earth's surface.