What Is Meant by the Term "Thin Capitalization

question 35

Multiple Choice

What is meant by the term "thin capitalization?"

• A) Undervaluing foreign investments
• B) Using as little debt financing as a country will allow
• C) Minimizing the amount of equity capital used to fund foreign operations
• D) Creating transparency in the methods used to fund foreign operations

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Definitions:

Self-Handicapping

A strategy where individuals create obstacles to their own success to protect self-esteem in case of failure.

Elaboration Likelihood Model

A theory in social psychology that explains different ways of processing stimuli, why they are used, and their outcomes on attitude change.

Dissonance Theory

A theory that suggests people are motivated to reduce the discomfort (dissonance) caused by inconsistencies between their beliefs and their actions.

Balance Model

A theoretical framework for understanding how different elements within a system maintain a state of equilibrium or balance.