Halo Effect Is the Worst of the Five Types of Evaluation

question 5

True/False

Halo effect is the worst of the five types of evaluation bias.

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Definitions:

MM Model

Refers to the Modigliani-Miller theorem, which proposes that under certain market conditions and assumptions, the value of a firm is unaffected by its capital structure.

Bankruptcy Risk

The likelihood that a company will be unable to meet its financial obligations and may have to declare bankruptcy.

Debt Financing

Raising funds through borrowing, typically by issuing bonds or taking out loans, which must be repaid at a later date, usually with interest.

Cash Preservation

The practice of managing resources to ensure sufficient liquidity and minimize financial risk.