When Multiple Indicators of a Single Concept Give Similar Results

question 75

Multiple Choice

When multiple indicators of a single concept give similar results, it is likely that the measures are providing a _____ depiction of the concept.

• A) reliable
• B) valid
• C) reactive
• D) reflective

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Definitions:

Weight of Debt

A component of a firm's capital structure that quantifies the proportion of total capital represented by debt.

Weighted Average Cost of Capital

A calculation of a company's cost of capital in which each category of capital is proportionately weighted, used to evaluate the cost of funding projects.

Bond Issue

The process by which a company or government raises funds by selling bonds to investors, which then are obliged to pay back with interest.

Cost of Equity

The return a company theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital.