The Authors Note That Even If You Don't Plan to Conduct

question 164

Multiple Choice

The authors note that even if you don't plan to conduct business abroad, it is beneficial to be aware of cultural rules. They point out that:

• A) it is best to focus on general cultural differences before trying to understand individual variations.
• B) it is easy to attribute another person's behaviour to personality rather than a cultural norm.
• C) most of us feel comfortable following another culture's rules once we understand them.
• D) most of the basic things that you really need to know will be stressed in guidebooks.

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Definitions:

Cost of Debt

The actual rate a firm incurs on its overall debt, representing the cost of acquiring funds.

Equity Risk

The risk of loss associated with fluctuations in the price of equities or stocks.

M&M Proposition I

A principle in corporate finance that asserts the market value of a firm is unaffected by the capital structure, assuming no taxes and perfect markets.

M&M Proposition II

A theory proposing that the cost of equity increases with the level of debt in a company, making the firm's weighted average cost of capital remain unchanged.