A Primary Government Can Impose Its Will on a Potential

question 50

True/False

A primary government can impose its will on a potential component unit if it has the authority to modify or approve the unit's budget.

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Definitions:

Tax Rate

The rate determining the tax payment required from a person or a corporation’s earnings.

Weighted Average Cost of Capital

A calculation of a firm’s cost of capital in which each category of capital is proportionately weighted, including equity, debt, and other forms of financing.

Market Risk Premium

The extra return investors demand for taking the risk of investing in stocks over a risk-free asset.

Common Stock

A form of shares in a corporation that grants the owner voting privileges and entitlement to a portion of the corporation's earnings via dividends.