Objects Are Grouped into Hierarchies,and Hierarchies into Classes

question 37

True/False

Objects are grouped into hierarchies,and hierarchies into classes.

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Definitions:

WACC

Weighted Average Cost of Capital; a computation that determines a company's capital cost by proportionally weighting each category of capital.

Capital Structure

The mix of a company's long-term liabilities, specific short-term liabilities, common equity and preferred equity, which funds its overall operations and growth.

Interest Tax Shield

The reduction in taxable income for individuals or corporations achieved by deducting interest payments on borrowed funds.

M&M Proposition II

A theory proposing that the cost of equity increases as a company increases its leverage, due to the riskier equity stream.