Which of the Following Statements Is FALSE

question 5

Multiple Choice

Which of the following statements is FALSE?

• A) When a firm borrows significant money to repurchase shares or pay a large cash dividend, the transaction is called a leveraged recapitalization.
• B) MM Proposition I applies to capital structure decisions made at any time during the life of a firm.
• C) By choosing positive-NPV projects that are worth more than their initial investment, a firm can enhance its value.
• D) The choice of capital structure does not change the value of a firm if the cost of equity is higher than the cost of debt.

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Definitions:

Breach of Contract

Occurs when one party in a binding agreement fails to fulfill their obligations without a legitimate legal excuse.

Obligations

Duties or responsibilities enforced by law, contract, or a sense of duty that compel someone to act or refrain from acting in a certain manner.

Disability

A physical or mental condition that significantly restricts one's ability to perform one or more major life activities.

Life Insurance

A contract between a policy owner and an insurance company that requires the insurance company to pay a designated beneficiary a sum of money upon the occurrence of the insured’s death.