A Model That Uses a System of Symbols or Expressions

question 28

Multiple Choice

A model that uses a system of symbols or expressions to represent a problem is called a(n) ______ model.

• A)mathematical
• B)iconic
• C)analog
• D)constrained

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Definitions:

DFL

Degree of Financial Leverage, a ratio measuring the sensitivity of a company's earnings per share to fluctuations in its operating income, due to changes in its capital structure.

Optimal Capital Structure

The most favorable blend of debt and equity financing that minimizes a company's cost of capital while maximizing its market value.

Stock Price

The current price at which a share of a company is traded on the stock market.

Optimal Capital Structures

The best mix of debt, equity, and other financial instruments that minimizes the cost of capital for a company while maximizing its value.