____ Errors Occur When the End Points of a Rating

question 32

Multiple Choice

____ errors occur when the end points of a rating scale are unrealistically defined.

• A) Central tendency
• B) Leniency
• C) Halo effect
• D) Severity

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Definitions:

Modigliani-Miller Model

A foundational financial theory proposing that the market value of a company is determined by its earning power and risk of its underlying assets, and is independent of the way it chooses to finance its investments or distribute dividends.

Restructuring

The process of reorganizing a company's structure, operations, or debt to improve efficiency or manage financial challenges.

Tax Effect

The impact of taxation on business decisions, investments, and net income, considering both current and future taxes.

DFL

Degree of Financial Leverage; a measure that evaluates the sensitivity of a company's earnings per share to fluctuations in its operating income, highlighting the impact of financial leverage.