Answer: B. stockholders expropriate value from bondholders by selecting high-risk projects.
Explanation:
Bankruptcy simply means when an individual or business cannot pay back the funds that is owed to the creditor. When bankruptcy is declared by a particular business, the assets for the business are used in paying back the debt.
One of the indirect costs of bankruptcy is the effect that a potential bankruptcy has on the firm's decisions. The general result is that stockholders expropriate value from bondholders by selecting high-risk projects.
Therefore, option B is the answer.
Answer:
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Explanation:
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Answer:
A
Explanation:
By definition, open-market operations change the monetary base.
In this exercise, the Fed engages in open-market purchases, which means that the Fed expands the amount of money in the banking system. Therefore the monetary base will increase by an amount equal to the amount of open-market purchases.
So monetary base will increase by $3 billion.
Answer:
40%
Explanation:
Total assets. $240,000
Less total liabilities ($130,000)
$110,000
Less common stock ($24,000)
Retained earnings at end $86,0000
Less Retained earnings at the beginning ($29,000)
Addition to retained earnings $57,000
Add dividends $6,400
Net profit earned $63,400
Add expenses $94,000
Revenue. $157,400
Therefore, company's net profit margin expressed as a percentage = Net profit earned / Revenue
= (63,400/157,400) × 100
= 40%
