All of the Following Are Recognized as an Important Influences

question 1

Multiple Choice

All of the following are recognized as an important influences in the development of the banking crisis of 2008 and the resulting credit crisis EXCEPT:

• A) Consumers, especially homeowners, took on too much debt.
• B) Too many subprime loans were repackaged and sold as securities.
• C) The IMF bailed out Freddie Mac and Fannie Mae.
• D) Real estate prices collapsed.

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Definitions:

IRR

Internal Rate of Return; a financial measurement tool utilized to assess the potential profit of investment opportunities.

WACC

Weighted Average Cost of Capital, a calculation that reflects the average rate of return a company is expected to pay to all its security holders.

After-Tax Value

The value of a transaction or investment after all taxes have been deducted.

Capital Structure

Refers to the blend of debt, equity, and other financing sources used by a company to fund its operations and growth endeavors.