The Introduction of Tax Benefit Pushes the Bias Towards Very

question 7

Multiple Choice

The introduction of tax benefit pushes the bias towards very high gearing levels to obtain lower WACC and higher value. What is the main reason why we do not observe such high gearing in real- world companies?

• A) The higher risk to the firm of financial distress
• B) The increasing risk of financial distress borne by finance providers
• C) The lower risk to the finance providers of liquidation
• D) The lower risk to the firm of financial distress

Grasp the mutual interdependence within a group.

Know the role of entitativity in perceiving group cohesiveness.

Understand the significance of roles and norms in guiding group members' actions.

Recognize group dynamics and their importance in the study of groups.

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Definitions:

High Affluence

A state of having a great deal of wealth, resources, or assets, often associated with high social status or economic power.

Low Affluence

Describes a state or condition where there are minimal financial resources or wealth.

Heavier Body

Describes a body mass that is greater than what is typically considered average or healthy, often assessed in terms of body weight relative to height.

Portion Size

The amount of a particular food that is served or consumed in one eating occasion.