A . What is the difference between common stock and preferred stock? b. If you are highly risk-averse, would you be more likely to invest in common stock or preferred stock? Explain
a . First, preferred stock does not carry voting privileges while common stock does. Second, the dividend
yield is fixed on preferred stock, but varies on common stock. Finally, owners of preferred stock
receive their dividends before any dividends are distributed to common stock owners.
b. Preferred stock is what you would invest in. The risk of holding it is smaller, since the dividend yield
is fixed, and since it has a prior claim on dividends.
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If net exports is a negative number, the government sector must ________ if the private sector is in a ________
A) run a surplus; surplus B) equal zero; deficit C) run a deficit; surplus D) The statement errs because the accounts are not related.
Elasticity is a measure of the responsiveness of change in quantity demanded to a change in price.
Answer the following statement true (T) or false (F)
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.
Refer to the above figure. It represents supply and demand for The Black Ash Steel Company's output. The firm's plant belches large quantities of smelly fumes and black ash into the air
Residents in the surrounding area have higher medical bills as a result. If the firm is forced to pay the full social cost of its production, what will occur? A) Black Ash's supply curve will shift from SA to SB. B) Demand for the firm's steel will shift to the left. C) The company's supply curve will shift from SB to SA. D) Black Ash will increase its own output to cover the cost increase.