Answer:
principal-agent problem
Explanation:
In a corporation, the principal-agent problem refers to conflict of priorities that exist between the shareholders and the management. Management has the duty of increasing the corporation value, and therefore increasing the shareholders' wealth. But sometimes, management makes decisions that benefit them more than the shareholders. This conflict of interest can be really dangerous for a corporation, since managers may safeguard their own personal interests and sacrifice the corporation's future value.
Answer: A direct relationship
Explanation: The link or relationship between money supply and inflation rate : In normal economic circumstances, if the money supply grows faster than real output it will cause inflation. In a depressed economy (liquidity trap) this correlation breaks down because of a fall in the velocity of circulation. This is why in a depressed economy Central Banks can increase the money supply without causing inflation. This occurred in the US between 2008-14
However, when the economy recovers and velocity of circulation rises, increased money supply is likely to cause inflation.
In other words ,If you are Increasing the money supply faster than the growth in real output will cause inflation. The reason is that there is more money chasing the same number of goods. Therefore, the increase in monetary demand causes firms to put up prices.
Answer:
Buy the stock because it is underpriced and investor will make money in the near future.
Explanation:
Required rate of return is defined as the estimated return am investor wants to gain for taking on a certain amount of risk when investing in securities.
The higher the risk the higher the required rate of return.
If the expected rate of return exceeds the required rate of return then the investor will consider the share underpriced and experiencing supernormal growth.
For example if a stock has required rate of return as 10% and expected rate of return as 15%, it means that the stock will perform above its peer stock in the market and the price will rise in the future.
Answer:
Option c. General Motors issues corporate bonds.
Explanation:
The corporate bonds are bonds that are used by companies as a way of raising capital. In essence, a corporate bond is a bond that is issued by a large corporation mainly for the purposes of financing of a project. In addition, the bonds are also a means of business expansion. Thus, general motors, in its action, is raising capital for later expansion.
