When Checking for the Significance of a Main Effect, the Degrees

question 14

Multiple Choice

When checking for the significance of a main effect, the degrees of freedom for the numerator are the

• A)number of levels of the main effect
• B)number of levels of the main effect minus 1
• C)number of levels of the main effect times 2
• D)degrees of freedom for the denominator minus 1

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Definitions:

Capital Structure

The mix of a company's long-term liabilities, specific short-term liabilities, common equity and preferred equity, which funds its overall operations and growth.

Interest Tax Shield

The reduction in taxable income for individuals or corporations achieved by deducting interest payments on borrowed funds.

M&M Proposition II

A theory proposing that the cost of equity increases as a company increases its leverage, due to the riskier equity stream.

Debt-Equity Ratio

A ratio assessing the comparative financing from equity and debt for a company’s assets.