Which One of the Following Statements Is NOT Correct

question 82

Multiple Choice

Which one of the following statements is NOT correct?

• A) A leveraged firm is riskier than a firm that is not leveraged.
• B) A leveraged firm is less risky than a firm that is not leveraged.
• C) A firm that uses debt magnifies the return to its shareholders.
• D) A firm that does not use debt incurs opportunity cost of increasing value of shares.

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Definitions:

Cartels

An agreement among competing firms to control prices or exclude entry of a new competitor in a market, often to maximize profits collectively.

Secret Price Concessions

Secret price concessions involve undisclosed discounts or benefits offered by a seller to a buyer, often to secure a deal or foster loyalty without publicly affecting the listed price.

Business-Cycle Stability

The condition of an economy experiencing minimal fluctuations in growth, unemployment, and inflation, resulting in a stable economic environment.

Participating Firms

Companies that engage in a particular market or economic activity, contributing to the production, distribution, or provision of goods and services.