Which of the Following Is an Important Assumption Required If

question 20

Multiple Choice

Which of the following is an important assumption required if using the WACC formula?

• A)Companies rebalance their capital structure to maintain a constant debt ratio.
• B)WACC must be used on public companies with actively traded securities.
• C)Management bonuses must be added back to free cash flows.
• D)The firm cannot issue any further debt without adjusting its WACC.

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Definitions:

Sternberg

Refers to Robert Sternberg, an American psychologist known for his theory on intelligence and creativity, which includes the triarchic theory of intelligence.

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An intense and absorbing romantic attachment to another person, often characterized by strong emotions and desire.

Eros

In psychology, a term derived from Greek mythology that represents the romantic, passionate love between individuals.

Secure Attachment Style

A form of attachment characterized by confidence in the availability and support of attachment figures, leading to healthy interpersonal relationships.