Which of the following statements is FALSE?
A) While debt itself may be cheap, it increases the risk and therefore the cost of capital of the firm's equity.
B) Although debt does not have a lower cost of capital than equity, we can consider this cost in isolation.
C) We can use MM Proposition I to derive an explicit relationship between leverage and the equity cost of capital.
D) The total market value of the firm's securities is equal to the market value of its assets, whether the firm is unlevered or levered.
Answer: B
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Which of the following is a true statement?
a. Transactions are events that may be either external or internal to an enterprise. b. Events that are internal to the firm do not require entries in the firm’s accounts. c. Transactions are economic or financial events that may or may not be recorded in the firm’s accounts. d. “Simple events” do not have any significant economic variables that lead to essentially different recording.
The project lifespan stage where team members come together for a purpose best describes
A) forming. B) storming. C) norming. D) performing.
Grover is an executive accountant with the firm of Hall & Associates, which obtains insurance from Interstate Insurance, Inc, on Grover's life. Grover dies. The proceeds of the policy belong to
A. Grover's heirs. B. Hall & Associates. C. Interstate Insurance. D. the state.
A golden parachute is a prearranged contract with managers specifying that, in the event of a hostile takeover, the target company managers will be paid a significant severance package.
Answer the following statement true (T) or false (F)