Potential buyers of ABC Corporation bonds are concerned about ABC Corporation declaring bankruptcy. Potential buyers of XYZ Corporation bonds are not concerned that XYZ Corporation may declare bankruptcy. Which of the following statements is correct?
a. Other things equal, the interest rate on XYZ Corporation bonds will be high relative to the interest rate on ABC Corporation bonds.
b. An ABC Corporation bond must have a longer term than an XYZ Corporation.
c. XYZ Corporation bonds carry less default risk than do ABC Corporation bonds.
d. All of the above are correct.
c
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The multiplier is
A) the percentage of a given change in income that goes towards consumption. B) the number which is multiplied by an autonomous change which gives the change in the equilibrium level of real GDP. C) the part of consumption that is independent of the level of disposable income. D) the proportion of total disposable income that is consumed.
What would the Herfindahl-Hirschman Index equal for an industry consisting of six firms with market shares of 40 percent, 30 percent, 20 percent, 5 percent, 3 percent, and 2 percent?
A. 0.95 B. 2.934 C. 2,938 D. 10,000
If the Mexican economy is using all of its available resources to produce goods, it means that the Mexican economy is producing at a point
a. located at one of the endpoints of the production possibilities curve b. beyond (exterior to) its production possibilities curve c. on its production possibilities curve d. inside (interior to) its production possibilities curve e. closer to the origin than its production possibilities curve
A firm will make a profit when
A) P > AVC. B) P > ATC. C) P = ATC. D) P = MC.