Peter Let His Son Borrow the Family Car

question 126

Multiple Choice

Peter let his son borrow the family car. Although he told him, "Don't be home late," the car didn't pull into the driveway until 3 in the morning. This is an example of:

• A) richness.
• B) communication failure.
• C) empathic listening.
• D) pseudomutuality.

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Definitions:

Equity Financing

A method of raising capital through the sale of shares in a company, providing investors ownership interests.

Debt Financing

The method of raising capital through the sale of bonds, notes, or loans, which must be repaid along with interest.

Marginal Cost

The cost of producing one additional unit of a product or service.

Optimal Capital Structure

The most favorable mix of debt and equity financing that minimizes a company's overall cost of capital while maximizing its stock price.