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Finger [1]
3 years ago
11

Suppose Sam would like to use $6,000 of his savings to make a financial investment. One way of making a financial investment is

to purchase stock or bonds from a private company. Suppose RoboTroid, a robotics firm, is selling stocks to raise money for a new lab—a practice known as finance. Buying a share of RoboTroid stock would give Sam the firm. In the event that RoboTroid runs into financial difficulty, it will be paid first. Suppose Sam decides to buy 100 shares of RoboTroid stock.
Which of the following statements are correct? Check all that apply.

a. The price of his shares will rise if RoboTroid issues additional shares of stock. b. RoboTroid earns revenue when Sam purchases 100 shares, even if he
purchases them from an existing shareholder.
c. Expectations of a recession that will reduce economy-wide corporate profits
will likely cause the value of Sam's shares to decline.
d. Alternatively, Sam could make a financial investment by purchasing bonds
issued by the U.S. government.
e. Assuming that everything else is equal, a U.S. government bond that matures 30 years from now most likely pays an interest rate than a U.S. government bond that matures 10 years from now.
Business
1 answer:
grin007 [14]3 years ago
7 0

Answer:

The correct options are option C and Option D.

Explanation:

Lets look at each option in turn and evaluate whether they are correct or incorrect

Option A: Incorrect. This can be understood by thinking in terms of the classic demand and supply of a given item. If the company issues more shares, there will be a greater amount of shares in the market for a potential investor to buy. This additional supply of shares will put a downward pressure on the price of the shares which will cause the share price to decrease.

Option B: Incorrect. When a company issues shares to raise money, it is known as equity finance. By doing so, the company is increasing its capital which is recorded in the balance sheet under the heading of "share capital". Another statement that will be impacted is the cash flow statement under the heading of cash flow from financing activity. The income statement will not be impacted. If Sam purchases shares from another investor, the company's statements will not be impacted.

Option C: Correct. Expectations of a recession that reduce corporate profits for make investors expect a lower return on investment if they invest in a corporation's shares. This will dampen the demand, thereby decreasing the price.

Option D: Correct. An investor measures the opportunity cost of an investment by generally comparing it to the risk free return that they can get on US bonds. So the investor can alternatively invest in US govt instruments.

Option E: Incorrect. A bond maturing 30 years from now will carry a DIFFERENT interest rate due to the varying tenor. The tenor of a bond affects the risk profile of an investment in the bond which makes bonds of differing maturities offer different returns in line with expectations concerning economic performance.

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What is the term for when businesses produce goods and services that consumers do not want​
tino4ka555 [31]

Answer:

Productive (technical) inefficiency.

Explanation:

A market failure can be defined as a situation in which the market fails to produce an efficient level of productivity or output that is required to meet consumer demand.

This ultimately implies that, a market failure arises when there is inefficiency in the distribution or allocation of goods and services in a free market.

In Economics, there are two types of inefficiency associated with the production of goods and services, these includes;

1. Allocative inefficiency: it occurs when businesses do not maximise output from the given inputs. Thus, it arises when businesses fail to increase the level of their production or productivity from a number of given inputs.

In conclusion, allocative inefficiency typically occurs when the price of a good or service isn't equal to its marginal cost i.e P ≠ MC.

2. Productive (technical) inefficiency: it occurs when businesses produce goods and services that consumers do not want.​ This is typically as a result of the incorrect and inefficient allocation of scarce resources by a business firm or entity.

4 0
3 years ago
Which of the following terms refers to the process of converting a not-for-profit stock exchange owned by its members to a for-p
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Answer and Explanation:

e. Demutualization

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3 years ago
Which government policy will create the following results?
Scrat [10]

Answer:

Any type of government policy that restricts free trade and the movement of capital can trigger the aforementioned consequences. Thus, the limitation of companies to obtain economic benefits can make them decide to close their activities, leaving employees on the street (increasing unemployment), reducing the country's economic production (causing the country's real GDP to decrease), and ultimately, generating monetary lags due to lack of economic production, generating devaluations that lower the international price level of the country's products.

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A drink manufacturer finds setting up a plant to make its own bottle caps expensive and technically difficult. Which of the foll
Salsk061 [2.6K]

Answer:

A) Outsourcing

Explanation:

Outsourcing refers to a business practice where a company gets some of the intermediate goods or services it needs from external suppliers (other companies). Usually outsourcing is carried on by companies in order to reduce costs, e.g. customer service calls handled by Indian companies because Indian workers earn a much lower salary than American workers.

3 0
3 years ago
When retained earnings are not enough to meet their long-term funding needs, businesses may be able to raise funds by?
sergij07 [2.7K]

When retained earnings are not enough to meet their long-term funding needs, businesses may be able to raise funds by <u>selling common stock</u>. Long-term funding can be defined as any financial tool with maturity going beyond one year (such as bank loans, bonds, leasing and other forms of debt finance), and public and private equity instruments.

<h3>What is a retained earnings?</h3>

Retained earnings are the total of profit an establishment has left over after paying all its direct costs, indirect costs, income taxes and its dividends to shareholders.

Therefore, the correct answer is as given above

learn more about retained earnings: brainly.com/question/25631040

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