What Is True Regarding Measuring Actual Performance

question 46

Multiple Choice

What is true regarding measuring actual performance?

• A)Managers only evaluate outputs, as behaviors are intrinsically complex.
• B)Outputs and behaviors are both important and easily measured.
• C)It is easier to measure the outputs and behaviors of nonroutine activities.
• D)Outputs are generally easier to measure than behaviors because they are more tangible and objective.
• E)Managers typically measure behaviors first and then outputs.

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Definitions:

Levered Firm

A company that uses debt (loans or bonds) in addition to equity in its financing structure, often leading to higher risk and potentially higher returns.

M&M Proposition I

A theory in corporate finance suggesting that in a perfect market, the value of a firm is unaffected by how it is financed, regardless of the debt-to-equity ratio.

Unlevered Cost of Capital

The cost of capital for a company that has no debt, reflecting the risk of investing in the company's equity alone.

Firm No Debt

A business that operates without borrowing money or issuing debt instruments.