Suppose stock A sells for $30 per share and pays dividends of $1 per share per year. Stock B sells for $40 per share and pays dividends of $2 per share per year. Through the process of arbitrage, we would expect the price of:
A. stock A to fall and/or the price of stock B to rise.
B. stock A to rise and/or the price of stock B to fall.
C. both stocks to rise or fall together.
D. neither stock to change.
A. stock A to fall and/or the price of stock B to rise.
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The Social Security tax is regressive because
A. the Social Security tax rate applied does not rise with the salary level. B. each individual must pay a set percentage of his or her income in Social Security taxes. C. as income increases, the Social Security tax rate increases at a decreasing rate. D. no Social Security tax is collected for incomes in excess of a "cap" income level.
How do oligopolistic firms that sell differentiated products determine their prices?
What will be an ideal response?
The Keynesian AD curve differs from the classical AD curve in that:
a. the classical AD curve can shift in response to non-monetary shocks. b. the Keynesian AD curve can shift in response to monetary shocks. c. the Keynesian AD curve can shift in response to non-monetary shocks. d. there is no difference, both are determined by the quantity theory. e. none of the above.
The cost of capital from different sources is called the weighted average cost of capital
Indicate whether the statement is true or false