Stockholders normally obtain higher expected payments than bondholders because
A. they are required by law to obtain a higher return.
B. they face higher risk.
C. the profit share declared as stock dividends is not taxable.
D. they vote themselves higher returns.
Answer: B
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An initial deficiency in reserves of $20 and a required reserve ratio of .5 lead to a maximum demand deposit contraction of
A) $8. B) $40. C) $50. D) $80.
If the marginal propensity to consume is 0.75 and government spending decreases by $2,000 billion, what is the change in GDP?
a. -$2,000 billion b. -$8,000 billion c. $2,000 billion d. $1,500 billion e. $8,000 billion
Which of the following is correct?
A. Nominal GDP growth = real GDP growth ? inflation B. Nominal GDP growth + inflation = real GDP growth C. Nominal GDP growth + real GDP growth = inflation D. Nominal GDP growth = inflation + real GDP growth
Fiscal policy is the use of taxes and spending by the government to affect aggregate demand.
Answer the following statement true (T) or false (F)