Explain what information that changes in the value of a firm's stocks provide for a firm's managers and for investors
What will be an ideal response?
Changes in the value of a firm's stocks provide important information for a firm's managers, as well as for investors. An increase in the stock price means that investors are more optimistic about the firm's profit prospects, and the firm's managers might want to expand the firm's operations as a result. By contrast, a decrease in the firm's stock price indicates that investors are less optimistic about the firm's profit prospects, so management may want to shrink the firm's operations.
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Equilibrium in the market for bank reserves determines the
A) price level. B) exchange rate. C) federal funds rate. D) 30-year Treasury bond rate. E) inflation rate.
According to social interest theory, ________
A) price regulations are unconstitutional B) regulation helps markets achieve efficiency C) monopoly practices last forever D) unregulated firms try to avoid creating deadweight loss
Which of the following is true of net taxes? a. The level of net taxes varies directly with the level of transfer payments. b. The level of net taxes varies inversely with the level of transfer payments. c. Net taxes must always be less than zero
d. Net taxes increase when income tax rates are reduced. e. Net taxes increase when income decreases.
The balance of trade records information about: a. purchases of U.S. merchandise exports by foreigners
b. purchases of foreign financial assets by Americans. c. American purchases of foreign services while traveling abroad. d. errors and omissions.