Why are bonds risky to a corporation?
When a company issues new bonds, it commits itself to pay out the coupon amount every year of the bond's life, whether business is booming or the firm is losing money. If the firm is unable to meet its obligation to bondholders in some year, bankruptcy may result. Stocks do not burden the company with any such risk, because the firm does not promise to pay stockholders any fixed amount.
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The firm's short-run marginal-cost curve is increasing when:
A. Marginal product is increasing B. Marginal product is decreasing C. Total fixed cost is increasing D. Average fixed cost is decreasing
At a competitive equilibrium with no externalities, taxes, subsidies, public goods, common resources, or high transactions costs, which of the following occurs?
i. an efficient outcome ii. definitely a fair outcome when judged by the fair-results approach iii. marginal cost equals marginal benefit iv. producer surplus equals consumer surplus A) i and iii B) i, ii and iii C) ii and iii D) i, ii, iii and iv E) only i
When the staff of the account manager at the Fed's Open Market Trading Desk analyzes forecasts on Treasury deposits and information on the timing of future Treasury sales of securities, what agency does it interact with?
A) The Securities and Exchange Commission B) The Treasury's Office of Government Finance C) The Treasury's Office of Federal Reserve Relations D) The Federal Deposit Insurance Corporation
According to neuroeconomists, the limbic portion of the brain called the amygdala is more primitive and deals with emotion
a. True b. False Indicate whether the statement is true or false