Johannes Has Been a Car Mechanic for Many Years and Is

question 101

Multiple Choice

Johannes has been a car mechanic for many years and is very good at diagnosing problems with cars.However,when an electric car comes into the garage,his approach to diagnosing the problem is unsuccessful.Johannes failure is likely the result of:

• A)a conjunction fallacy.
• B)an availability heuristic.
• C)functional fixedness.
• D)a mental set.

Understand the impact of different financial elements such as financial distress, agency costs, and bankruptcy costs on a firm's target capital structure.

Grasp the basic principles of the Modigliani-Miller (MM) theorem, including its propositions with and without taxes.

Differentiate between business risk and financial risk and their determinants.

Comprehend the concept of financial leverage and its impact on a firm’s earnings per share (EPS) and earnings before interest and taxes (EBIT).

---

Definitions:

Contract Law

A branch of law dealing with the formation, enforcement, and interpretation of agreements between parties.

Discharged by Agreement

The termination of contractual obligations through mutual consent of the parties involved.

Contract

A legally binding agreement between two or more parties that outlines obligations and rights of each party.

Anticipatory Breach

Occurs when one party to a contract indicates, before the performance is due, that they will not fulfill their contractual obligations.