Which of the Following Is Not a Cost of Decentralization

question 14

Multiple Choice

Which of the following is not a cost of decentralization of corporate decision making?

• A)Incentive problems
• B)Coordination costs and failures
• C)Less effective use of central information
• D)More effective use of local knowledge

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Definitions:

Market Capitalization Rate

An alternative term often used to refer to the cost of equity or the expected return of a market portfolio.

Plowback Ratio

A metric indicating the percentage of earnings retained by a company after dividends have been paid out to shareholders.

P/E Ratio

A valuation metric that compares the current share price of a company to its per-share earnings.

Constant-Growth DDM

A valuation method that estimates the value of a stock by using its expected dividends, which grow at a constant rate indefinitely.