Polarization Theory Makes Predictions Opposite That of Risky Shift Theory

question 15

Multiple Choice

Polarization theory makes predictions opposite that of risky shift theory when

• A)the average of members' prediscussion judgments is close to the cautious pole.
• B)diffusion of responsibility is controlled.
• C)diffusion of responsibility is not controlled.
• D)the average of members' prediscussion judgments falls at the midpoint of the continuum.
• E)the average of members' prediscussion judgments is close to the risky pole.

---

Definitions:

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and earnings without increasing its financial leverage or equity financing.

Return On Equity

A measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively management is using a company’s assets to create profits.

Payout Ratio

A financial metric that shows the proportion of earnings a company pays to its shareholders in the form of dividends.

Internal Growth Rate

The highest amount of growth achievable for a business without obtaining external financing, based solely on reinvestment of its earnings.