Why do financial markets depend on accurate accounting and disclosure practices?
What will be an ideal response?
Investors in primary and secondary markets make decisions on which firms to invest in, when to invest, how much to invest, and when to sell based on information about firms. If the information is misleading, investors will invest less or, possibly, stop investing. Capital markets depend on accurate information and can function poorly when information is misleading.
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Which of the following occurs when an economic activity has a spillover benefit on third parties not engaged in the activity?
A) An economic profit B) A positive externality C) A gain in producer surplus D) A gain in consumer surplus
Which of the following market structures provides socially efficient outcomes?
A) Oligopoly B) Monopoly C) Perfect competition D) Monopolistic competition
Suppose a share of stock is expected to pay an annual dividend of $12 forever. At a discount rate of 9.4 percent, the share's market price should be
A) $12.77. B) $13.13. C) $112.80. D) $127.66.
How do growth rates vary across countries? Are the rich countries getting richer while the poor are getting poorer?