Which of the Following Statements Is FALSE

question 106

Multiple Choice

Which of the following statements is FALSE?

• A) The relative proportions of debt, equity, and other securities that a firm has outstanding constitute its capital structure.
• B) The most common choices are financing through equity alone and financing through a combination of debt and equity.
• C) A project's net present value (NPV) represents the value to the new investors of a firm created by the project.
• D) When corporations raise funds from outside investors, they must choose which type of security to issue.

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Definitions:

Financial Support

Monetary assistance provided to individuals or organizations to help cover costs or fund activities.

ESOP

Employee Stock Ownership Plan, a program that provides a company's workforce with an ownership interest in the company, usually in the form of stock shares.

Senior Debt Financing

A type of debt that has priority over other unsecured or otherwise more junior debt owed by the issuer in terms of repayment in the event of a sale or bankruptcy.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and gives shareholders voting rights and a dividend.