In foreign exchange markets, demand and supply become closely interrelated, because a person or firm that demands one currency must at the same time _____________ another currency—and vice versa.
a. supply
b. create
c. demand
d. locate
a. supply
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Kevin has a lot of free time and he decides to pick up a new hobby. He has two options—he can take art classes or can sign up for French cooking classes
He estimates that the art classes would cost him $70, and would provide him with a benefit of $100. On the other hand, the cooking classes would cost him $120, but provide him benefits worth $160. Use cost-benefit analysis to arrive at the optimum choice for Kevin.
The weighted average of a firm's expected return on its stock and the interest rate that it pays for debt is known as the:
A) internal rate of return. B) opportunity cost of capital. C) risk-free rate of return. D) company cost of capital.
Moral hazard can be avoided by:
A. employers monitoring employee effort. B. removing the asymmetric information. C. employers incentivizing employees to maintain consistent effort. D. All of these statements are true.
The basic purpose of financial markets is:
A. match people who want money to spend now with people who want to save their money for later. B. buy and sell different currencies in order to make a profit. C. sell commodities to firms as inputs. D. buy commodities from firms and the government to sell to the public.