If Electrons Are Collectively Compressed into a Very Small Volume

question 54

Multiple Choice

If electrons are collectively compressed into a very small volume where the Pauli exclusion principle become important in preventing one electron from occupying space near a second electron, what is the result?

• A) The electrons generate a very large pressure to oppose further compression.
• B) The electrons fall into orbit around one another in mutual pairs that reduce the restricted quantum space, allowing further shrinkage of the star.
• C) Nuclear fusion occurs between electrons, producing energy and heating the star's core.
• D) Half the electrons are transformed into antimatter (positrons), which then annihilates electrons, producing a burst of energy and the explosion of the star.

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Definitions:

Value of the Firm

The total worth of a company based on its current market capitalization plus any debts, and minus any cash on the company's balance sheet.

Interest Tax Shield

The decrease in income tax liabilities due to permitted interest expense deductions.

Levered Firm

A corporation that has debt in its capital structure, indicating it uses borrowing (leverage) to finance its operations or expansions.

M&M Proposition I

A principle of financial theory stating that under perfect market conditions, the value of a firm is unaffected by how it is financed.