Question

Which of the following statements is FALSE? Select one: a. A firm’s stock price is affected both by its own financial decisions and the economy. b. The risk-return trade-off implies that the return on a riskless asset must be zero. c. The agency problem means that managers may act in their own interests and not on behalf of stockholders. d. A partnership has no legal business structure separate from its owners.

Answer 1

Sole proprietorship has no legal business structure separate from its owners so statement ( D )is false which says that partnership has no legal business structure separate from its owners.

Rest of the statements are true as stock prices are affected by both financial decisions and economy and risk trade off implies that return of risk free securities must be zero and agency problem means when management is acting it in its own interest.

So answer would be statement (d)