Log in
Economics
8
answers
0
watching
94
views

Which of the following is true about retained earnings?

A) they are considered to cost the same as equity capital when used to finance a project

B) they are considered to be essentially free to the company for investment in projects since it is using its own money

C) retained earnings are always paid out in dividends to stockholders.

D) retained earnings are cheaper to use for funding projects than bonds but more expensive than equity

Watch
8
answers
0
watching
94
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share
Already have an account? Log in
Share
Already have an account? Log in
Share
Already have an account? Log in
Share
Already have an account? Log in
Share
Already have an account? Log in
Share
Already have an account? Log in
Share
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

Municipal bonds, or munis,

Select one:

a. are usually a safe investment.

b. pay higher interest rates than most bonds.

c. are often risky investments.

d. are not usually tax-exempt.

Question 17

Question text

The Efficient Market Hypothesis argues that

Select one:

a. stocks are generally overpriced.

b. every investment has some risk.

c. stocks are usually priced about right.

d. all investments are the same.

Question 18

Question text

The par value of a bond is

Select one:

a. a rating of the quality of a bond.

b. the total amount borrowed.

c. the stated interest on the debt.

d. its purchase price.

Question 19

Question text

Which of the following is true regarding the trade offs associated with money?

Select one:

a. If we invest money, those same funds will not immediately be available for spending.

b. Because of scarcity, all of these are correct.

c. Because of scarcity, if we spend a certain amount of money, that same money will not be available to invest.

d. Investors have made the decision to put off spending now in hopes that they money they invested will create more money.

Question 20

Question text

Which of the following statements is true?

Select one:

a. All of these are correct.

b. There are trade-offs invovled in using credit cards.

c. By using a credit card, you may be able to immediately get a good or service that you cannot pay for with cash, but, because of the interest, you will end up paying more than the "price tag" amount.

d. Credit cards often have a "spending limit".

Moral hazard is not eliminated in debt financing because

A) borrowers have an incentive to assume greater risk than is in the interest of the lender.

B) firms with a great deal of debt often go bankrupt.

C) principal-agent problems are greater with debt financing than with equity financing.

D) the use of restrictive covenants tends to increase moral hazard.

Why are corporations more likely to raise funds externally by debt instead of equity?

A) moral hazard is less of a problem with debt contracts

B) transactions costs tend to be higher in the stock market than bond market

C) to avoid paying dividends

D) interest rates tend to be lower than dividend rates

Which of the following is NOT a bank liability?

A) checkable deposits

B) CDs

C) mortgage loans

D) borrowings from the Federal Reserve

Banks use repurchase agreements to

A) ensure that payments on consumer loans are made on time.

B) borrow funds from business firms or other banks.

C) guard against price fluctuations on long-term bonds.

D) ensure that they always have enough funds on hand to meet their federal tax liabilities.

If a bank has a leverage ratio of 0.1 and a return on capital of 2%, what is its return on equity?

A) 0.2%

B) 2.1%

C) 5%

D) 20%

Which of the following statements about checking deposits is true?

A) It is a liability for both households and banks.

B) It is an asset for both households and banks.

C) It is an asset for households but a liability for a bank.

D) It is a liability for households but an asset for a bank.

"In any economy, there is a multiplier as a dollar turns over and creates more dollars.

An important aspect of every economic development plan is figuring out how to create multipliers in the economy.

The 'win' to a state from creating and growing new advanced technology companies is the multiplier effect from new jobs, higher-than-average wages (in Oklahoma $73,395, compared to $38,235), and the leverage of public sector concept and seed-stage investment capital attracting private equity.

Whether you believe that the state has a role in creating new companies, it's a fact that capital attracts capital. Oklahoma has traditionally lacked early stage, or startup, funding for new ventures. That's why the Concept and Seed Capital Funds managed by i2E were created.

In 2009, there was $17 million in venture capital invested here; in 2013 that number was down to $8 million, with the majority of that being in deals in which i2E invested. From 2012 to 2013, the total venture capital investment dollars in the US grew about 7.5 percent. During this same period of time, venture capital invested in Oklahoma declined more than 50 percent.

There is virtually no other private sector venture capital available to Oklahoma entrepreneurs. The Concept and Seed Capital Funds not only help entrepreneurs get started, they prime the pump for follow-on rounds.

From 1999 to 2013, $10,844,477 in Concept Fund investment leveraged $198,439,722 in private capital investment.

The Seed Capital Fund, founded in 2008, during the worst recession of our nation's history, invested $5.6 million in 15 companies and achieved leverage of $22.7 million in co-investment.

Last year, 30 of our clients obtained $33 million in private equity.

When that funding is taken away (the Legislature just reduced the Seed Fund by $2 million) the state experiences a negative multiplier.

That -$2 million means that four to eight new companies won't get started in Oklahoma.

Considering the expanded impact of this negative multiplier, Oklahoma is missing out on the opportunity to leverage another $8 to $26 million in private equity and create more high-paying jobs that drive our state's economic growth.

Entrepreneurship is the core driver of Oklahoma's economic success. Our major corporate presence today - Devon Energy, Continental Resources, Chesapeake Energy, SandRidge Energy, Hobby Lobby, Sonic (the nation's largest chain of drive-ins, which began in 1953 as the Top Hat root beer stand in Shawnee), America Fidelity, Love's - are all businesses that started and grew here.

Our state has so much going for it. A climate that encourages entrepreneurship is what Oklahoma has always been about.

The economic multiplier works when we stay committed as a state and when we consistently feed the pipeline of startup companies.''

1. The article did not touch on fiscal policy, however, what are your thoughts and what can we assume given the numbers that were given in the article?

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in