One of the Advantages of Simulation Is That

question 91

Multiple Choice

One of the advantages of simulation is that

• A) it is much less expensive than a mathematical solution
• B) it always generates a more accurate solution than a mathematical solution
• C) the policy changes may be tried out without disturbing the real-life system
• D) model development is less time consuming than for mathematical models
• E) model solutions are transferable to a wide variety of problems

Learn how the project's risk level influences its required rate of return.

Recognize the importance of the cost of capital in evaluating investment opportunities.

Appreciate the concept of capital structure weights and their computation based on market values.

Grasp the impact of taxation on the cost of capital and investment decisions.

---

Definitions:

Fiduciary Duty

A legal obligation of one party to act in the best interest of another. The obligated party is typically someone entrusted with the care of money or property.

Breach of Contract

The violation or failure to perform any term of a contract without a legitimate legal excuse.

Watered Shares

Shares that have been issued by a company at a value much greater than its actual asset value, leading to an inflation of the company's apparent worth.

Par Value

The face value of a bond or stock as stated by the issuer, which has little relation to its market price.