Which of the Following Statements Is FALSE

question 87

Multiple Choice

Which of the following statements is FALSE?

• A)The agency costs of debt can arise only if there is no chance the firm will default and impose losses on its debt holders.
• B)Agency costs represent another cost of increasing the firm's leverage that will affect the firm's optimal capital structure choice.
• C)An under-investment problem occurs when shareholders choose to not invest in a positive-NPV project.
• D)When a firm faces financial distress,it may choose not to finance new,positive-NPV projects.

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Definitions:

Lectures Skipped

The number of class sessions not attended by a student.

Final Grade

The concluding evaluation of a student's performance in a course, often determined by a combination of coursework, examinations, and participation.

Significance Level

A threshold in statistical hypothesis testing, below which a null hypothesis is rejected, indicating that observed results are not due to random chance.

Linearly Related

A relationship between variables where a change in one variable is associated with a proportional change in another variable.