What are the two critically important functions for corporate financing performed by stock exchanges?
What will be an ideal response?
First, by providing a secondhand market for stocks, stock exchanges make individual investment in a company much less risky. Investors know that if they need money, they can always sell their stocks to other investors or to stock market specialists at the current market price. This reduction in risk makes it far easier for corporations to issue new stocks.Second, the stock market determines the current price of the company’s stocks. That, in turn, determines whether it will be difficult or easy for a corporation to raise money by selling new stocks.
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Which of the following is the Fed's best strategy for dealing with demand shocks?
a. Maintain a money supply target b. Decrease the money supply c. Maintain a passive monetary policy d. Neutralize the impact with an increase in the money supply e. Increase the interest rate
Is the monopolist supply decision more complicated than that of competitive supply?
A. Yes, because the monopolist can choose its price, and the perfect competitor cannot. B. No, because they are both price takers. C. No, because the market determines the quantity for the monopolist. D. No, because the market determines the price for both firms.
A decline in interest rates tends to expand the economy by
a. encouraging private investment and decrease in bank lending. b. appreciating the currency and lowering the profitability criterion for investments. c. decreasing the cost of capital and reducing net exports. d. depreciating the currency and raising net exports.
Under international trade we export those goods for which we have a relatively low
A. materials cost. B. wage cost. C. accounting cost. D. opportunity cost.