Question

When a bond's rating goes from AAA to C, this means that the price of the bonds already issued will likely _____, which will _____ its yield.

Question 9 options:

a)	rise; increase

b)	rise; decrease

c)	fall; increase

d)	fall; decrease

The main advantage of issuing stock to raise financial capital is:

Question 10 options:

a)	limited liability of risk

b)	the ability to keep company information and data private

c)	ability to retain complete ownership

d)	not having to share profits with investors

Economic rent is the payment to owners of which factor of production?

Question 11 options:

a)

land

b)	physical capital

c)

labor

d)	human capital

The marginal revenue product of capital is equal to the marginal product of capital:

Question 12 options:

a)	plus the product price.

b)	multiplied by the price of capital.

c)	multiplied by the product price.

d)	plus the price of capital.

Answer 1

1. c) fall; increase
(As the rating of bond declines, its price will decrease. Price and yield of bond move in opposite direction. So, yield of bond increases)

2. a) limited liability of risk
(As stocks increaes number of partners so liability of risk becomes limited)

3. a) Land
(According to classical economics, economic rent is payment for non produced inputs like land)

4. c) multiplied by the product price
(marginal revenue product of capital = marginal revenue*marginal product of capital where marginal revenue = price of the product)