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Regarding the EPS fallacy, which of the following statements is incorrect: a. When a company issues debt and uses all the proceeds to buy back

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Regarding the EPS fallacy, which of the following statements is incorrect: a. When a company issues debt and uses all the proceeds to buy back equity and as a result EPS rises, the fact that some analysts associate the rise of EPS to an improvement in the company's performance is called the EPS fallacy. b. One of the reasons behind the EPS fallacy is not to take into account that when EPS rises mechanically due to a leveraged recapitalisation, the cost of equity also rises in the same proportion and the share price does not change fassume no tanes and perfect capital markets world) c. When a company issues debt and uses all the proceeds to buy back equity, EPS rises mechanically, and this is called the EPS ballocy d. Suppose companies A and B have identical cash flows but different capital structures. Suppose further that EPS(N)Eg:EPSEB). We cannot conclude that A has a better performance than B

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