Why is a bond considered to be a loan but a share of stock is not?
What will be an ideal response?
A bond is a loan because the firm promises to pay back the principal and interest to the bondholder. Rather than a loan, a share of stock is the purchase of part ownership of the company itself. The firm isn't obliged to return the investor's funds at any particular date; instead, the investor owns a share of the firm's assets and has a claim on the firm's profits.
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Suppose that, at an official ticket price of $480, there are 6,000 Justin Timberlake fans wanting to attend his concert, but only 4,000 ticketed seats are available. Which one of the following statements is then TRUE?
A) There will be scalpers outside the arena selling tickets for $480. B) There will be a surplus of tickets. C) The market clearing price of the tickets is less than $480. D) The market clearing price of the tickets is more than $480.
According to the random walk theory
A) today's stock price will be related to yesterday's stock price. B) successive prices of a stock are independent of each other. C) stock prices can easily be predicted for as much as 52 weeks into the future. D) stock prices rise and fall in predictable cycles that correspond with the overall business cycle.
A noncooperative equilibrium is one in which:
A. a dominant strategy exists for both players. B. each player ignores the actions of the other players. C. always results in a negative-negative outcome. D. the participants act independently, pursuing only their individual interests.