In Equity Theory, the Internal Tension That Is Caused by an Imbalance

question 109

Multiple Choice

In equity theory, the internal tension that is caused by an imbalance in the ratios is known as:

• A) cognitive distortion.
• B) expectancy.
• C) equity distress.
• D) goal commitment.
• E) cognitive dissonance.

---

Definitions:

Financial Structures

The specific mixture of long–term debt and equity that a company uses to finance its operations and growth.

Equity

Equity represents an owner's share in the assets of a company, remaining after deducting liabilities.

Debt

Debt is an amount of money borrowed by one party from another, under the condition that it is to be repaid at a later date, usually with interest.

Restrictive Covenants

Provisions in a contract or bond agreement that limit certain actions of the borrower, to protect the interests of the lender.