An Equity Multiplier of 1

question 25

Multiple Choice

An equity multiplier of 1.64 means that for every $1 the firm raises in new equity, the firm can:

• A) Acquire an additional $1.64 in new assets.
• B) Acquire an additional $1.64 in new debt.
• C) Earn $1.64 in additional profits.
• D) Earn $1.64 in additional profits per share.
• E) Pay $1.64 in additional dividends per share.

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Definitions:

Belief Perseverance

The tendency to maintain one's belief even after it has been discredited by new evidence.

Additional Evidence

Supplementary information or data that supports or clarifies an argument, claim, or hypothesis.

Belief Perseverance

A cognitive phenomenon where individuals stick to their initial beliefs even when faced with new, contradictory evidence.

Unanimous Verdict

A legal decision where all jurors agree on the verdict in a court case.