What Is the "Crown Prince Syndrome

question 32

Multiple Choice

What is the "Crown Prince Syndrome?"

• A)When assessment center information is used for making managerial decisions it creates a self-fulfilling prophecy.
• B)When participants in assessment centers return to their work, jealous coworkers refer to them as "crown princes."
• C)One result of participating in an assessment center is the inflated self-perception of being a "crown prince."
• D)Managers who are promoted without being evaluated in an assessment center are referred to as "crown princes."

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Definitions:

Financial Leverage

The use of borrowed funds to finance the acquisition of assets, with the expectation that the income or capital gain from the assets will exceed the cost of borrowing.

WACC

Weighted Average Cost of Capital; a calculation that reflects the cost of a company's financing (debt and equity) weighted by the proportion of each financing source in the overall capital structure.

Tax Shields

Deductions and credits available to taxpayers that lower the total tax liability by reducing taxable income.

Equity Risk

The risk of loss arising from fluctuations in the values of equity investments.