Rational Behavior

question 74

Multiple Choice

Rational behavior

• A) means incentives don't matter.
• B) requires people to consider the total costs and total benefits of their decisions.
• C) requires thinking at the margin.
• D) requires perfect information.

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Definitions:

Sustainable Growth

The rate at which a company can grow its sales, profits, and dividends without having to increase equity or debt financing.

Dividend Payout Ratio

A financial metric that indicates the percentage of a company's earnings paid out to shareholders in the form of dividends.

Current Assets

Assets of a company that are expected to be sold, consumed, or converted into cash within one year or within the normal operating cycle of the business.

Average Collection Period

A metric that calculates the average time taken to receive payments from customers, indicating the efficiency of a company's credit and collection policies.