When a Borrower's Net Worth Is High

question 24

Multiple Choice

When a borrower's net worth is high,

• A)the cost of its internal funds will be high.
• B)the cost of its internal funds will be low.
• C)the cost of its external funds will be high.
• D)information costs are less likely to constrain capital spending.

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Definitions:

Generalization

In psychology, the tendency to respond in the same way to different but similar stimuli.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired together; a response that is initially elicited by the second stimulus is eventually elicited by the first stimulus alone.

Spontaneous Recovery

The reappearance of a previously extinguished response after a period without exposure to the conditioned stimulus.

Principle

A fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.