Suppose You Would Have to Pay Troy at Least $12

question 96

Multiple Choice

Suppose you would have to pay Troy at least $12 to get him to part with his new water bottle. Loss aversion implies that if Troy had not yet purchased the water bottle, he would:

• A)be willing to pay more than $12 to buy it.
• B)be willing to pay exactly $12 to buy it.
• C)be willing to pay less than $12 to buy it.
• D)no longer be interested in buying it.

---

Definitions:

Additional Funds Needed (AFN)

The projected amount of new external funding required by a firm to support its business expansion and meet its capital requirements.

Target Payout Ratio

Percentage of net income paid as a cash dividend.

Constant Ratio

A financial strategy or policy that maintains a fixed proportionate relationship between two or more variables, such as assets and liabilities.

Pro Forma Financial Statements

Financial statements projecting future years' earnings, usually to assess the impact of new projects or acquisitions.