A company's credit risk can be high even if it is solvent and well-capitalized, if there is:
a. Actually, it is impossible for a solvent, well-capitalized company to have a high credit risk.
b. Insufficient cash earnings and/or insufficient access to the credit markets.
c. High expected inflation.
d. Political and central bank instability in the nation(s) where it operates.
e. A high real, risk-free interest rate.
.B
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If the money multiplier is 5 and the Federal Reserves issues bonds in the amount of $6 million, what is the final change to the money stock?
A) - $30 million B) $30 million C) $1.2 million D) - $1.2 million
Several writers have helped to popularize the notion that stock prices follow no discernible pattern. What is meant by a random walk, and how can you explain why people continue to invest in stocks if the random walk theory is correct?
What will be an ideal response?
Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,
a. quantity demanded decreases. b. quantity supplied increases. c. there is a surplus. d. All of the above are correct.
Suppose that a monopolist calculates that at present output and sales, marginal cost is $1.00 and marginal revenue is $2.00. She could maximize profits by:
A. decreasing output and leaving prices unchanged. B. decreasing price and increasing output. C. increasing price and decreasing output. D. decreasing price and leaving output unchanged.