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Memphic Memphic
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6 years ago
Which of the following statements is FALSE?
A) When a firm faces financial distress, creditors can gain by making sufficiently risky investments, even if they have negative NPV.
B) When a firm has leverage, a conflict of interest exists if investment decisions have different consequences for the value of equity and the value of debt.
C) In some circumstances, managers may take actions that benefit shareholders but harm the firm's creditors and lower the total value of the firm.
D) Agency costs are costs that arise when there are conflicts of interest between stakeholders.
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
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6 years ago
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