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1. A statistical measure of the degree of correlation between two quantitative variables is called:
l. correlation coefficient
2. Which of the following best illustrates a formal model of the relationship between risk and return?
a. Security Market Line (SML)
c. Weighted Average Cost of Capital (WACC)
d. Earnings before income taxes-earnings per share (EBIT-EPS)
3. The variation in return on an investment caused by general economic factors that affect all investments is called:
a. systematic risk
b. nonsystematic risk
c. nondiversifiable risk
d. firm-specific risk
5. Flexibility, Risk, Income, Control, Timing, and Other (FRICTO) are factors to consider in capital structure decisions.
1. l. Correlation Coefficient. The other parameters - correlation is if the variables are related and is measured by correlation coefficient. Covariance is a statistical measure of ...
The solution has explanations for various multiple choice questions relating to capital structure