Which One of These Statements Is Correct

question 82

Multiple Choice

Which one of these statements is correct?

• A)Firms across all industries in the U.S.tend to have similar debt-to-equity ratios.
• B)The banking industry tends to have the lowest debt-to-equity ratio of any U.S.industry.
• C)Financial leverage lowers risk to equity holders.
• D)MM Propositions ignore bankruptcy costs.
• E)MM Propositions without taxes illustrate that a firm's overall cost of capital is affected by leverage.

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Definitions:

Leisure

Time available for ease, relaxation, and activities one chooses to engage in beyond compulsory activities like work or chores.

Consumption

The use of goods and services by households or individuals, constituting one of the primary components of economic activity.

Nonlabor Income

Income received from sources other than employment, such as investments, pensions, or gifts.

Wage Rate

The amount of money that an employee is paid per unit of time, such as an hour, often analyzed in labor economics.