A new country is formed in central Africa. It has no absolute advantage in crude oil, diamonds, or wool. However, it does manufacture high-quality bows and arrows for specialized safari adventures. Which of the following statements is true?
A. The new country should try to produce its own crude oil, diamonds, and wool.
B. The new country has a comparative advantage in the production of bows and arrows.
C. The new country has an unqualified advantage in the production of bows and arrows.
D. The new country has a determined advantage in the production of arrows.
E. The new country is engaged in dumping bows and arrows.
Answer: B
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The primary purpose of a stock split is to
a. increase paid-in capital b. reduce the market price of the stock per share c. increase the market price of the stock per share d. increase retained earnings
[APPENDIX] When the owner of a sole proprietorship withdraws assets from the business for personal use
a. it is treated like a noncash dividend. b. it is illegal because the assets belong to the separate entity, the proprietorship. c. it would be recorded as a loss by the proprietorship. d. it is recorded as a reduction of owner's equity.
Debt financing typically has a higher cost of capital than equity
Indicate whether the statement is true or false
Return on assets is useful in evaluating management, analyzing and forecasting profits, and planning activities.
Answer the following statement true (T) or false (F)