What are the differences between common stock and preferred stock?
What will be an ideal response?
Common stockholders elect the members of the board of directors, but preferred stockholders are not eligible to vote in these elections. Preferred stock holders receive a fixed dividend set when the stock is issued while holders of common stock receive a dividend that fluctuates with the profitability of the corporation over time. Corporations suffering losses may decide to suspend paying dividends, but if the corporation does pay dividends, it must first pay the dividend promised to preferred stockholders before making any dividend payments to the common stockholders.
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The transfer of short-term liabilities into long-term investments is called:
A) maturity transformation. B) risk transformation. C) investment restructuring. D) intertemporal transformation.
For consumers, chocolate chip cookies and doughnuts are substitutes. So, an increase in the price of chocolate chip cookies will lead to a rightward shift in the demand curve for doughnuts
Indicate whether the statement is true or false
Refer to Figure 12-17. Which of the following statements is true?
A) The current market price is $3 but the firm will be able to increase the price in the future. B) The current market price is $3 but the price will fall in the long run as new firms enter the market. C) The current market price is $3 but the price will increase in the future as the market demand increases. D) The current market price is $3 but the price will fall in the long run as a result of a decrease in demand.
The labor theory of value
A) is what economists believe determines prices today. B) says that wages must always be greater than prices. C) says that the price of a good is determined by the amount of labor required to produce it. D) All of the above.