The Use of Personal Borrowing to Change the Overall Amount

question 154

Multiple Choice

The use of personal borrowing to change the overall amount of financial leverage to which the individual is exposed is called:

• A) Homemade leverage.
• B) Dividend recapture.
• C) The weighted average cost of capital.
• D) Private debt placement.
• E) A privileged subscription offer.

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Definitions:

Marginal Social Cost

The total cost to society of producing an additional unit of a good or service, including both private costs and external effects.

External Social Cost

Costs of production or consumption that affect individuals not involved in the transaction, often unaccounted for by the market price.

Efficient Level

Describes a state where resources are allocated in the most effective manner, maximizing output and outcomes.

Marginal Social Benefit

The incremental advantage to the community from the consumption or production of an additional unit of a product or service.