The basic trade-off in valuing any asset is between:
A. amount of risk and length of loan.
B. amount of risk and rate of return.
C. rate of return and amount of loan.
D. rate of return and length of loan.
Answer: B
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There is a technological advance in the production of a good and simultaneously also an increase in the expected future price. Which of the following will happen?
A) The equilibrium price will rise because the supply curve shifts rightward. B) The equilibrium price falls because the supply curve shifts leftward. C) The technological improvement shifts the supply curve rightward while the increase in the expected future price shifts the supply curve leftward. The net effect is not known. D) The demand curve shifts rightward and the supply curve does not shift.
In the long run, perfectly competitive firms earn just enough revenue to
A) pay all fixed costs. B) pay all accounting costs. C) pay all opportunity costs. D) attract entry.
The _____ of using the market for corporate control make it important to build incentives into executive pay packages that can reduce _____ by better aligning the incentives of shareholders and managers
a. benefits; principal/agent problems b. costs and uncertainties; principal/agent problems c. benefits; influence costs d. costs and uncertainties; influence costs
Which of the following is not a nonsensical headline?
a. British perpetuities about to mature. b. Disney issues new bonds with term of 7 percent. c. Corporate bonds currently pay higher interest rates than government bonds. d. Standard and Poor's judges new junk bond to have very low credit risk.