Suppose a firm wanted to go out of business. The firm sells all its assets and pays off everything it owes to creditors. The stockholders would receive
A) nothing.
B) their annual dividend payment.
C) one half of the funds; the other half of the funds goes to bondholders.
D) the rest of the funds, after everyone who has a claim against the firm is paid.
Answer: D
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
France is capital abundant and Italy is labor abundant. Shoes are labor intensive and wheat is capital intensive
Draw diagrams to illustrate the pre- and post-trade equilibria for each of the two countries including the production points, the consumption points, the international price, and the volumes of exports and imports for each. Be sure to identify which country has comparative advantage in which good. Which factors gain and which lose when trade is opened between the two countries? Explain carefully.
In the above table, if the marginal revenue product is $18, how many workers will the profit maximizing monopsonist hire and what wage will they pay each worker?
A) 5; $18 B) 3; $14 C) 3; $18 D) 4; $16
Which of the following statements is false?
A) A call option will sell for a fraction of the cost of the stock. B) A futures contract can be written for a commodity (such as wheat), or for a currency. C) A futures contract gives the owner the right, but not the obligation, to buy or sell a commodity at a specified price on a given future date. D) The specified price at which an option gives the owner the right to buy a stock at is called the stick price.