________ Is a Form of Self-Fulfilling Prophecy in Which Believing

question 3

Multiple Choice

________ is a form of self-fulfilling prophecy in which believing something can make it true.

• A) The confirmation bias
• B) The Pygmalion effect
• C) The anchoring bias
• D) The framing effect
• E) The distinction bias

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Definitions:

M&M Proposition II

A theory in corporate finance stating that the cost of equity is a linear function of the company's capital structure, formulated by Modigliani and Miller.

Cost of Equity Capital

The return that investors expect for investing in a company's equity, essentially the cost of raising equity capital for the firm.

Equity Capital

Funds raised by a company through the sale of common or preferred stock to investors.

Bankruptcy

A legal process through which individuals or businesses unable to meet their outstanding debts seek relief from some or all of their liabilities.