The "Voluntary Bumping Plan" Used by Airlines to Resolve the Problem

question 55

Multiple Choice

The "voluntary bumping plan" used by airlines to resolve the problem of overbooked flights was developed by economist

• A) Adam Smith.
• B) John Maynard Keynes.
• C) Alan Greenspan.
• D) Julian Simon.

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Definitions:

Constant Dividend Growth Rate

The constant dividend growth rate is a model assuming that dividends from a stock or portfolio grow at a fixed, constant rate indefinitely.

Common Equity

The amount of money that would be returned to shareholders if all the assets were liquidated and all the company's debt was paid off.

WACC

Weighted Average Cost of Capital, a measure used to estimate the average rate a company pays to finance its assets, factoring in both debt and equity.

DCF Approach

The Discounted Cash Flow (DCF) approach is a valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for the time value of money.