Which of the following statements is FALSE?
A)The market value balance sheet captures the idea that value is created by a firm's choice of assets and investments.
B)One application of MM Proposition I is the useful device known as the market value balance sheet of the firm.
C)On the market value balance sheet the total value of all securities issued by the firm must equal the total value of the firm's assets.
D)Investors can alter the leverage choice of the firm to suit their personal tastes either by borrowing and reducing leverage or by holding bonds and adding more leverage.

Question

Quizplus · Accepted Answer

Investors do not have the ability to alter the leverage choice of the firm. Leverage is determined by the firm's financing decisions and cannot be altered by individual investors.

Which of the Following Statements Is FALSE