The Phenomenon of Pluralistic Ignorance Is One in Which Bystanders

question 26

Multiple Choice

The phenomenon of pluralistic ignorance is one in which bystanders in an emergency tend to

• A) suddenly forget what they know regarding delivering aid in emergency situations, due to overwhelming stress.
• B) become "paralyzed" in emergency situations, due to overwhelming empathy for the person in the emergency situation.
• C) perpetuate the mistakes of others while caring for a person in an emergency situation.
• D) look around at other people who don't appear alarmed, and assume there's no emergency after all.

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Definitions:

Systematic Risk

A risk that influences a large number of assets. Also called market risk.

Optimal Capital Structure

The best mix of debt and equity financing that minimizes the company's cost of capital and maximizes its value.

Weighted Average Cost of Capital

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted.