Answer:
A) Company A is the one that is financially leveraged.
Where there is the presence of debt in the capital structure of a firm, that firm is said to be Financially leveraged.
B) A is true.
A company's return on equity or expected returns increases because the use of leverage increases stock volatility. Volatility increases its level of risk which in turn increases returns. This happens only if the company is operating an ideal level of financial leverage.
On the other hand, however, but excessive debt can increase the risk of default and can lead to low returns or even bankruptcy.
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Answer:
too few resources devoted to its production.
Explanation:
Answer:
(B). Adverse selection.
Explanation:
Adverse selection in insurance occurs when customers obtain insurance coverage based on certain information they possess about a potential risk, which the insurance company is usually not aware of. For example a person who does a dangerous job may want to purchase a disability insurance.
<em>Sofie and the members of her homeowner's association, looking to increase their homeowner's property coverage limits, due to information they have about possible hurricane storms in the area, is an example of </em><em>adverse selection</em><em>.</em>
<span>Given,
Andrew's earning was $55,000 per year.
Fees(tuition and other related expense) for MBA school that Andrew joined $25,000 per year.
To find: total cost of the degree(explicit cost+opportunity cost)
Solution:
Explicit cost = fees for the course including all the expenses = $25,000 per year for 2 years = $25,000*2 = $50,000.
Opportunity cost = the loss of benefits from one alternative when other alternative is chosen. In this case, it is salary from the job which Andrew quits to join MBA school = $55,000 per year for 2 years = 55000*2 = $1,10,000.
So, total cost of the degree = $50,000 + $1,10,000 = $1,60,000
Answer: Option C $1,60,000</span>
if one input in the production of a commodity is increased