Imagine Performing Structural Equations Analysis, and the Fit Index Indicates

question 14

Short Answer

Imagine performing structural equations analysis, and the fit index indicates the model has a good fit. What does this tell you?

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Definitions:

Interest Tax Shield

The savings in income tax that a company achieves through deducting its interest expense from its taxable income.

WACC

Weighted Average Cost of Capital, a calculation of a firm's cost of capital where each category of capital is proportionately weighted.

Capital Structure

The particular combination of debt and equity that a company uses to finance its overall operations and growth.

Financial Risks

The possibility of losing money on an investment or business operation due to market fluctuations, default, or other financial uncertainties.