Question: WWhy this statement is false? d). Shareholders have an incentive to invest in negative-NPV projects that are risky, even though a negative-NPV project destroys value

WWhy this statement is false?

d). Shareholders have an incentive to invest in negative-NPV projects that are risky, even though a negative-NPV project destroys value for the firm overall. This is because that the equity holders will benefit at the expense of the debt holders. When securities are fairly priced, debtholders of the firm will bear these agency costs. (1 mark) F

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