If the interest rate were 10 percent, how much would people be willing to pay for a stock that was certain to yield a $2 per share stream of net earnings continuously in the future?
a. $2
b. $10
c. $20
d. $100
C
You might also like to view...
Using a graph, show a market equilibrium. Suppose the costs of inputs increase. How is this shown on the graph? Explain what is happening in the market
What will be an ideal response?
The Coase theorem argues that the assignment of property rights will generate an efficient solution to the problem of
a. positive externalities as long as bargaining costs are small b. negative externalities as long as bargaining costs are small c. negative externalities as long as bargaining costs are great d. any type of market failure e. any type of market failure that involves high transaction costs
Mikki decides to work five hours the night before her economics exam. She earns an extra $75, but her exam score is 10 points lower than it would have been had she stayed home and studied. Her opportunity cost is the:
a. five hours she worked. b. $75 she earned. c. 10 points she lost on her exam. d. time she could have spent watching television. e. guilt she feels about neglecting her economics studies.
If relevant information can be obtained at no cost, people are ________ when they fail to use all available information given that there are usually ________ to making a wrong forecast.
A. not behaving rationally; costs B. behaving rationally; costs C. not behaving rationally; no costs D. behaving rationally; no costs