Factors That Impact the Returns of All Assets in the Market

question 5

True/False

Factors that impact the returns of all assets in the market such as the national unemployment rate or inflation rate are a type of risk that can be eliminated through diversification.

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Definitions:

Earnings Before Interest

Net income before interest expenses have been deducted; used to analyze the profitability of a company's core operations without the cost of borrowing.

Tax Rate

The percentage at which an individual or corporation is taxed by the government on the income or profit earned.

Optimal Capital Structure

The most favorable mix of debt and equity financing that minimizes a company's cost of capital and maximizes its stock price.

Tax Saving

Strategies or investments that reduce the amount of tax owed by taking advantage of allowable deductions, credits, or exemptions.