The Proportions of Debt and Equity Used in Calculating the Weighted

question 7

Multiple Choice

The proportions of debt and equity used in calculating the weighted average cost of capital (WACC) should be based on the current ____ weights of the individual components.

• A)book value
• B)market value
• C)replacement value
• D)a and b

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Definitions:

Horn Effect

Attributing a variety of negative qualities to those you dislike.

Recency Effect

Tendency to attend to the most recent information observed about another person in order to form or modify an impression.

Interpersonal Perception

Process of selecting, organizing, and interpreting your observations of other people.

Interpretation

The act of explaining or understanding the meaning of something, such as a text, action, or event.