As the corporation uses more debt financing, which of the following holds true for the stockholders?
A. The expected return to the stockholders increases and the standard deviation of the return increases.
B. The expected return to the stockholders decreases and the standard deviation of that return decreases.
C. The expected return to the stockholders increases and the standard deviation of the return decreases.
D. The expected return to the stockholders decreases and the standard deviation of the return increases.
Answer: A
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Why does the production possibility frontier have a negative slope?
What will be an ideal response?
When financial markets and institutions are not efficient in matching savers and borrowers,
A) interest rates fall, which discourages saving even further. B) interest rates fall, which discourages investment even further. C) resources are lost. D) investment rises.
If the average cost of producing 10 sweaters is $6.50 and the marginal cost of producing the tenth sweater is $6.75, the average cost of producing 10 sweaters will be:
A. less than $6.50. B. $6.50. C. exactly $6.75. D. more than $6.50.
When the price of oil rises unexpectedly, the equilibrium price level ________ and the unemployment rate ________ in the short run
A) rises; falls B) falls; rises C) falls; falls D) rises; rises