A Misrepresentation Is Material If

question 61

Multiple Choice

A misrepresentation is material if:

• A) it would likely induce a reasonable person to enter into a transaction.
• B) the maker does not know it would likely induce the other party to enter into the transaction.
• C) it is made knowingly.
• D) it misrepresents a transaction's value by more than 20%.

Recognize the role of systematic risk, market risk premium, and risk-free rate in estimating expected returns using the Security Market Line.

Comprehend the effects of taxes on the cost of debt and WACC.

Identify the variables that influence a firm's Weighted Average Cost of Capital (WACC).

Understand the importance of project risk assessment beyond the use of WACC as a cutoff rate.

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Definitions:

Mass Extinctions

Events in Earth's history when significant numbers of species disappear rapidly and irreversibly, often due to drastic environmental changes.

Varves

Thin, alternating light-colored and dark layers of sediment that form in lakes because of seasonal variations of deposition and biologic activity.

Ice Cores

Cylinder-shaped samples from ice sheets or glaciers that scientists study to understand past climates.

Tree Rings

The concentric rings on the cross-section of a tree trunk, representing a record of a tree's age and the conditions under which it grew.