Which of the following statements regarding debt and equity is FALSE?

Group of answer choices

Debt has a finite term whereas equity has an infinite term.

The rate of return required by a firms creditors is always lower than the rate required by its shareholders.

Since the firm is not legally obligated to pay dividends to shareholders, equity is considered to be zero-cost financing.

Whereas debt normally provides a fixed rate of return, the return on equity typically varies from year to year.