__________ Refers to the Investment Choices That Involve the Movement

question 69

Multiple Choice

__________ refers to the investment choices that involve the movement of corporate monies from one investment to another.

• A) Capital flight
• B) Outsourcing
• C) Globalization
• D) Alienation

Understand how the book value of capital is considered in calculating the Weighted Average Cost of Capital (WACC).

Identify and describe various approaches used in estimating the cost of equity.

Explain factors that affect the Weighted Average Cost of Capital (WACC).

Understand the component costs that comprise a firm's preferred stock and how they are calculated.

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Definitions:

Fixed Asset

Long-term tangible property or equipment that a firm owns and uses in its operations to generate income.

Liquidity

The convenience with which one can convert an asset into cash without influencing its market price.

Financial Distress

A situation in which a company struggles to meet or has difficulty paying off its financial obligations to creditors.

Liquid Assets

Assets that can be quickly and easily converted into cash without significant loss of value.