Which of the following statements is FALSE? A) Once investors know the recap will occur,...
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Finance
Which of the following statements is FALSE?
A) Once investors know the recap will occur, the share price will rise immediately to a level that reflects the value of the interest tax shield that the firm will receive from its recapitalization.
B) With a recapitalization, even though leverage reduces the total value of equity, shareholders capture the benefits of the interest tax shield up front.
C) The share price rises after the completion of the recapitalization.
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