According to the Theory of the Wisdom of Crowds, Under

question 104

Multiple Choice

According to the theory of the wisdom of crowds, under the right circumstances ________.

• A) a mass market approach is favorable to a target market approach
• B) a target market approach is favorable to a mass market approach
• C) groups are smarter than the smartest people in them
• D) companies can make money by giving their products away for free
• E) consumers can generate value

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Definitions:

Weighted Average Cost of Capital (WACC)

The average rate of return a company is expected to pay its security holders to finance its assets, integrating different sources of finance weighted by their proportional usage.

Costs of Equity

The return that shareholders require for investing in a company's equity, effectively the cost to the company of raising equity capital.

After Tax Debt

The net cost of debt after accounting for the tax deductibility of interest expenses.

Portfolio Beta

Portfolio Beta measures the sensitivity of a portfolio's returns to the returns of the market as a whole, serving as an indicator of its risk relative to the market.