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?
Expert
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.
True or false? “U.S. exports create a demand for foreign currencies; foreign imports of U.S. goods generate supplies of foreign currencies.” Explain.
Evaluate and explain the statements: “Competition is the essential despot of the market economy”.
Double coincidence of wants: This means that one person's wishing to buy and sell should coincide with another person’s wish to buy and sell.
Briefly describe Traditional approach of capital structure?
A perfectly competitive industry achieves allocative efficiency since: w) goods and services are produced at the lowest possible cost. x) services and goods are produced up to the point where the last unit gives a marginal benefit to consumers equivalent to the margin
Illustrate Economics for citizenship?
What is the most important source of revenue and the major type of expenditure at the Federal level?
Use the circular flow model to confirm this assertion for $50 million increase in spending for space research?
Explain the markets and prices of the Market System?
Both individual sellers and buyers within perfect competition: w) can affect the market price through their own individual actions. x) can affect the market price by joining along with some of their competitors. y) have to take the market price as a specified. z
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