Which of the following statements is FALSE?

a.

If a firm is subject to graduated income tax rates, insurance can produce tax savings if the firm is in a higher tax bracket when it pays the premium than the tax bracket it is in when it receives the insurance payment in the event of a loss.

b.

Because reducing debt reduces the risk of financial distress, insurance can relax this tradeoff and allow the firm to increase its use of debt financing.

c.

By its very nature, insurance for non-diversifiable hazards is generally a positive beta asset; the insurance payment to the firm tends to be larger when total losses are low and the market portfolio is high.

d.

By lowering the volatility of the stock, insurance can encourage concentrated ownership by an outside director or investor who will monitor the firm and its management.