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Owners of corporate stock obtain pure economic profit only to the extent which the rates of return realized by owning the stock exceed the: (1) interest rate that would have been produced by other inv
The present value of an annual income stream which goes onto forever is: (w) infinite. (x) zero. (y) the annual income multiplied through the interest rate. (z) the annual income divided through the i
The present value of an annual income stream which goes on forever equals the annual income as: (w) times infinity. (x) divided by the wage rate. (y) multiplied by the interest rate. (z) divided by th
Perpetuity is a: (w) life insurance policy which matures upon retirement. (x) nondepreciable piece of capital. (y) financial asset which pays its owner an annual income forever. (z) pyramid scheme as
A security which promises to pay a fixed amount of money annually till the issuer purchases this from an owner is termed as a: (i) present value. (ii) future value. (iii) perpetuity. (iv) residual. (v
When Henrietta Homeowner invests $100 to replace her old mechanical thermostat along with a new computerized “smart” thermostat, in that case her gas and electric bills will be decreased b
When the rate of return onto an asset exceeds the interest rate: (1) its present value exceeds its price. (2) the market is moving away by equilibrium. (3) you should sell the asset as rapidly as poss
Capitalization is a process: (a) that converts fixed cost into variable cost. (b) by which predictable income flows are translated into wealth. (c) of financial intermediation by bankers. (d) of explo
The transformation of predictable income streams within wealth is: (1) asset liquidation. (2) financial optimization. (3) rent-seeking. (4) monopolization. (5) capitalization. I need a good answer on
Accounting profits are normal along with zero economic profits while there is: (1) monopoly power which has not yet been capitalized. (2) unpredicted short run surges within demand for a good. (3) unc
Pure economic profits are NOT: (w) normal costs of production. (x) reduced to “normal” levels in long-run pure competition. (y) zero in long run monopolistic competition. (z) possible unde
Pure economic profits do not arise due to: (w) monopoly power. (x) capital owners’ receipts of normal accounting returns to investment. (y) risk and uncertainty. (z) entrepreneurial innovation.
The concept that innovation is a main source of economic profit is central to the concepts of: (1) Joseph A. Schumpeter. (2) Karl Marx. (3) Frank Knight. (4) Horatio Alger. (5) John Bates Clark. Can
Innovation: (w) entails financial investment to create human capital. (x) comprises the commercial introduction of a new product or production process. (y) can reasonably describe only normal accounti
Economic profits are NOT recompenses to entrepreneurs who: (1) endure business uncertainty. (2) provide society along with economic capital. (3) innovate new goods and technologies. (4) exercise monop
Opinion of Frank Knight, about economic profits is: (1) rewards for bearing uncertainty. (2) easily capitalized for firms possessing monopoly power. (3) rewards for innovation. (4) easily predicted wh
In words of Frank Knight, risk, not like uncertainty: (w) is totally unpredictable. (x) is a main source of pure economic profits. (y) may be estimated. (z) cannot be taken into account while firms ma
An asset's liquidity is, by description, MOST negatively associated to the: (1) asset's suitability as a commodity money. (2) transaction costs incurred in its purchase or sale. (3) speed with which t
Equilibrium interest rates on different financial securities tend to be negatively associated to: (1) the time remaining until an asset matures. (2) default, exchange rate, and interest rate riskiness
A demand curve for bonds moving to the right is probably to be attributable to: (w) a business cycle recession. (x) lower expected (future) interest rates. (y) an increase into the expected rate of in
When the rate of return on investment equals the interest rate, in that case the optimal level of investment will: (w) rise. (x) fall. (y) not change. (z) Any of the above is possible. Hello guys I w
Financial assets will create lower rates of return to prospective investors while: (w) they become more liquid. (x) their prices go up. (y) interest rates increase. (z) default risks decrease. Hey fr
When the interest rate falls, in that case the price of a long-term bond: (w) falls faster than a perpetuity bond. (x) rises. (y) does not change. (z) falls relatively less than a short term bond. I
Nominal interest rates are: (w) always identical to real interest rates. (x) the percentage of monetary premiums paid per time era for the use of money. (y) determined by the size of economic rents. (
Lower bond prices follow through higher: (w) interest rates. (x) real estate speculation. (y) present value of future income by the bonds. (z) growth rates of national income. Please choose the right