Your rich uncle, Ebenezer, dies and leaves you $10 million. You plan to buy $10 million worth of common stock in Microsoft, but your accountant thinks you should buy $10 million worth of Microsoft bonds. a . What is the difference between Microsoft's common stock and its bonds? b. What is the advantage of each? c. What is the disadvantage of each?
a . If you own a share of stock, then you are an owner of the company, but if you own a bond you are a
creditor of the company. A share of stock represents ownership in the company while a bond is a loan
agreement whereby the company borrows a sum from the bondholder and agrees to repay this sum
with interest at maturity.
b. The advantage of owning stock is that you will share in any profits that the firm earns. The advantage
of owning a bond is that you have first claim on the corporation's profits; bonds are safer investments
than stocks.
c. The disadvantage of owning stock is that the value of the stock can fall below the price you paid for it;
stocks are riskier investments than bonds. The disadvantage of owning a bond is that you don't share in
any profits that the firm earns.
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Refer to the below graphs. (Assume that the pre-migration labor force in Country A is 0d and that it is 0u in country B.) If business income is total output minus total labor cost, then business income in country A after the immigration occurs is equal to area:
A. haf
B. habg
C. hcg
D. hce0
When Little Furniture Company produces 100 chairs - its average variable cost is $25 . The marginal cost of the 101st chair is $22 . If the firm chooses to produce the 101st chair, what will happen to average variable cost? Explain
What will be an ideal response?
_______ unemployment rises and falls with the business cycle.
a. Frictional b. Systematic c. Cyclical d. Temporary
Refer to the graph shown.
An economy is in both short- and long-run equilibrium at ________.
A. point A B. point B only C. point C only D. point B to C