Suppose you purchase shares in Acme Gadget Company for $10 per share. The company believes there is a 20 percent chance it will fail to earn a discounted future profit of $1.85. What is the expected rate of return on your investment?
A. 18.5 percent.
B. 20.0 percent.
C. 13.5 percent.
D. 14.8 percent.
Answer: D
You might also like to view...
Which of the following is not true for the U.S. payroll tax?
A. The incidence falls mainly on employees. B. It is levied on employers. C. It is levied on employees. D. The incidence falls mainly on employers.
Suppose a manager is deciding how to allocate workers between two plants. The marginal product of labor in plant 1 is 10 units of output. The marginal product of labor in plant 2 is 14 units of labor. What should the manager do?
A. Reallocate workers from plant 1 to plant 2, because MPL is greater in plant 1 than in plant 2. B. Reallocate workers from plant 1 to plant 2, because MPL is greater in plant 2 than in plant 1. C. Reallocate workers from plant 2 to plant 1, because MPL is greater in plant 1 than in plant 2. D. Reallocate workers from plant 2 to plant 1, because MPL is greater in plant 1 than in plant 1.
With few applicants and several key positions to fill, the owner of a commercial bakery increased the starting wage offered from $12.00 to $15.00 per hour and was able to fill the positions. Which of the following is true of the $12.00 wage rate?
a. The wage is lower than equilibrium. b. The wage is at equilibrium. c. The wage created a surplus. d. The wage attracted just enough workers.
Which of the following best describes exchanges rates that are determined by the demand and supply foreign exchange in the absence of official intervention?
A) floating exchange rates B) the gold standard C) fixed exchange rates D) the Bretton Woods system