The financial investor about bonds
Describe three ways to finance corporate activity. Make a case that stocks are more risky for the financial investor than are bonds?
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There are three ways to finance corporate activity: it can be done internally out of undistributed profits or Corporations can borrow from financial institutions or issue their own stocks or bonds.
Common stock is an ownership share in a corporation that gives a holder voting rights and a share of dividends. Bonds are promissory notes where the corporation promises to pay the holder a fixed amount in the future plus annual interest on the loan. A bondholder is not an owner, only a lender. Stocks are usually riskier than bonds. Bondholders have a “legally prior claim” against corporate earnings. Stock dividends cannot be paid until all interest payments due to bondholders are paid. Interest is guaranteed as long as the company is healthy, whereas dividend depends on profits.
Question The Current Account captures international fund flows due to net income on (past) investments, net transfers, and i._______________________________, general
A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000. The cost of each good is $10. Calculate the firm's short-run profit or loss. w) loss of $6,000. x) profit of $6,000. y profit of $30,000. z) There is insufficient
Question: To determine the real exchange rate, what two pieces of information do you need in addition to the nominal exchange rate? Answer: Q : Exchange is the necessary consequence Explain: “Exchange is the necessary consequence of specialization.”
Explain: “Exchange is the necessary consequence of specialization.”
The clearest illustration of economic inefficiency would be: (w) maintaining a warehouse full of pet rocks within hopes such that someday the fad will return. (x) pet rocks being unavailable to people willing to pay a price that exceeds the marginal s
Utilitarianism proposes such that the finest society is one which gives the: (w) fundamental goods to meet people’s requirements. (x) greatest happiness for the maximum number of people. (y) exact measurement of utility and disutility. (d) highe
Use the circular flow model to confirm this assertion for a $1 per hour increase in the minimum wage?
How will the goods and services be produced?
Favor laissez- faire economic policies tended by Adam Smith, who also: (w) saw the requirement for several state intervention. (x) believed there were no conditions in which the government must intervene. (y) supported most government
Describe briefly Low financial leverage, low operating leverage?
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