If There Are Two Firms in an Industry and Each

question 135

Multiple Choice

If there are two firms in an industry and each has 50 percent market share, then the Herfindahl-Hirschman Index equals

• A) 2,500.
• B) 2,800.
• C) 5,000.
• D) 6,600.

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Definitions:

Bond Rating Agencies

Organizations that assess the creditworthiness of both corporate and governmental bonds, issuing ratings that affect interest rates and investment attractiveness.

Upward Sloping Term Structure

A situation in the bond market where longer-term debt securities yield higher returns than shorter-term ones, indicative of normal market conditions.

Interest Rates

The amount charged by lenders as a percentage of the principal, which borrowers pay for the use of assets.