A Situation in Which the Costs of Producing or the Benefits

question 78

Multiple Choice

A situation in which the costs of producing or the benefits of consuming a good spill over onto those who are neither producing nor consuming the good is called a(n)

• A)transaction cost.
• B)property right.
• C)free rider.
• D)externality.
• E)public good.

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Definitions:

Serial Bonds

Bonds issued under a single indenture at the same time, but which mature at different intervals, distributing the repayment over several years.

Early Bond Redemption

A financial process in which a bond issuer repays the principal amount of the bond before its maturity date, often resulting in penalties or fees.

Bond Redemption

The process of paying back the principal amount of a bond to the bondholders at or before maturity.

Warrants

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a security at a specified price before a certain date.