The Elaboration Likelihood Model (ELM) States That There Are Two

question 67

Multiple Choice

The elaboration likelihood model (ELM) states that there are two basic routes to persuasion, the central route and the peripheral route. With the peripheral route to persuasion:

• A) the message should contain a lot of information
• B) the quality of the message claims is more important than the spokesperson, headline, pictures, or music bed
• C) the message will be more likely received if a popular celebrity endorser is used
• D) the receiver is viewed as very actively involved in the communication process

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Definitions:

DFL

Degree of Financial Leverage, a ratio measuring the sensitivity of a company's earnings per share to fluctuations in its operating income, due to changes in its capital structure.

Optimal Capital Structure

The most favorable blend of debt and equity financing that minimizes a company's cost of capital while maximizing its market value.

Stock Price

The current price at which a share of a company is traded on the stock market.

Optimal Capital Structures

The best mix of debt, equity, and other financial instruments that minimizes the cost of capital for a company while maximizing its value.