Function of financial markets in competitive economy

Assignment Help Financial Management

Reference no: EM132068718

1. Which of the following statements are true?

A. Positive economic profits will lead to entry of investment capital into an industry.

B. Economic profits can be negative even if accounting profits are positive.

C. Both a and b are true.

D. Neither a nor b are true.

2. Which of the following statements best describe the function of financial markets in a competitive economy?

A. Financial markets provide a way to reinsert consumer savings into the circular flow of money through the economy.

B. Financial markets provide a means of funding investments that earn returns that are equal to or greater than the returns required by investors.

C. Financial markets provide a mechanism for determining the optimal value of different investment opportunities.

D. All of the above are true.

3. Investors expect that profit levels among companies will generally increase at higher rates than before. Which of the following best describes the impact of this changing expectation in the market for funds?

A. Shortages of funds and rising interest rates.

B. Shortages of funds and falling interest rates.

C. Surpluses of funds and falling interest rates.

D. Surplus of funds and rising interest rates.

4. A wave of new technologies is causing companies to invest additional capital into restructuring their production facilities to take advantage of these technologies. Which of the following is the most likely impact on the market for funds?

A. Shortages of funds and rising interest rates.

B. Shortages of funds and falling interest rates

C. Surpluses of funds and rising interest rates.

D. Surpluses of funds and falling interest rates.

Reference no: EM132068718

Questions Cloud

What would the company new stock price and wacc be : Under these new assumptions, what would the companys new stock price and WACC be?

What is probability that same number appears on both dice : Two dice are trown. What is the probability that the same number appears on both dice? What is the probability that the same number appears on both dice?

How long will it take him to pay off the debt : How long will it take him to pay off the debt?

Common base year analysis : Restate the following balance sheet to do a COMMON BASE YEAR analysis:2005 2006 Base Year Assets

Function of financial markets in competitive economy : Which of the following statements best describe the function of financial markets in a competitive economy?

Difference between accounting profits and economic profits : What is the primary difference between accounting profits and economic profits?

Coal mining company and are considering opening new mine : You own a coal mining company and are considering opening a new mine. The mine itself will cost $ 116.6 million to open. If this money is spent?

Regarding the beta measurement for equity investment : Which of the following statements are true regarding the beta measurement for an equity investment?

How much is interest earned on interest : How much total interest is earned on the original deposit? How much is interest earned on interest?

User Account

All Pages