When Discussing Weighing Schemes for Calculating the Weighted Average Cost

question 98

Multiple Choice

When discussing weighing schemes for calculating the weighted average cost of capital, ________.

• A) market value weights are preferred over book value weights and target weights are preferred over historical weights
• B) book value weights are preferred over market value weights and target weights are preferred over historical weights
• C) book value weights are preferred over market value weights and historical weights are preferred over target weights
• D) market value weights are preferred over book value weights and historical weights are preferred over target weights

---

Definitions:

Producer Surplus

The disparity between what sellers are ready to take for a product or service and the actual amount they get.

Minimum Imposed Price

A price floor set by the government or other regulatory body, above the equilibrium price, to prevent prices from falling too low.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing a measure of consumer satisfaction.

Producer Surplus

The difference between what producers are willing to accept for a good and the actual amount they receive.