The Use of Debt Financing

question 41

Multiple Choice

The use of debt financing:

• A) reduces agency costs between the shareholders and management by increasing the amount of risk the managers take.
• B) increases agency costs between the shareholders and management by limiting the amount of risk the managers take.
• C) increases agency costs since managers prefer to keep more retained earnings rather than pay a dividend.
• D) b and c.

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Definitions:

Target Market

Identifies the specific group of consumers at which a product or service is aimed.

Price/Quality Relationship

The perceived value of a product based on its cost compared to its quality, influencing consumer purchasing decisions.

Walmart

A multinational retail corporation operating a chain of hypermarkets, discount department stores, and grocery stores, known for its vast product selection and low prices.

Geographic Targeting Strategy

A marketing approach that tailors advertising and promotional efforts to consumers in specific geographic areas or locations.