Which of the Following Statements Is False

question 2

Multiple Choice

Which of the following statements is false?

• A) Legitimacy Theory is derived from 'classical' political economy theory.
• B) Legitimacy Theory suggests that organisations will act in a way that society perceives as legitimate.
• C) Legitimacy Theory relies upon the notion of the 'social contract'.
• D) Legitimacy Theory asserts that organisations will attempt to ensure that society perceives their actions as 'legitimate'.

---

Definitions:

Opportunity Cost Principle

The opportunity cost principle denotes the value of the best alternative foregone when a decision is made to pursue a particular action.

Operating Assets

Assets that are used in the day-to-day operations of a business to generate revenue, excluding investments and non-operational assets.

CAPM

The Capital Asset Pricing Model, an investment theory that shows the relationship between the expected return of an investment and market risk.

Cost of Equity

The cost of equity represents the return a firm is expected to pay to its shareholders to compensate them for their investment risk.