The "Predation" Explains That

question 16

Multiple Choice

The "predation" explains that:

• A)if a preferred financing source is not available,the firm will try to raise funding through the next preferred choice.
• B)there is a natural hierarchy of preferred financing routes for managers wishing to raise funds.
• C)firms weigh the costs of having too much debt when they are doing poorly against the tax benefits of debt when they are doing well to arrive at their optimal capital structures.
• D)a competitor might purposely lower its prices in an attempt to drive the highly levered competitor out of business.

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Definitions:

Interval Data

A type of data that is measured along a scale, where the difference between values is meaningful, but there is no true zero point.

Nominal Data

Data classified into categories that cannot be ordered or ranked in any meaningful way.

Ordinal Data

A type of categorical statistical data representing order or rank, such as levels of satisfaction, without specifying the exact differences between ranks.

Null Hypothesis

A hypothesis that proposes there is no significant difference or effect and serves as the default assumption to be tested against an alternative.