A Serious Problem with Average Total Cost Pricing Is That

question 135

Multiple Choice

A serious problem with average total cost pricing is that

• A)the deadweight loss to society is greater than with unregulated monopoly pricing.
• B)the firm has no incentive to earn a profit.
• C)the deadweight loss to society is the same as with unregulated monopoly pricing.
• D)inefficiencies in the firm will not be tolerated.
• E)the firm has no incentive to reduce costs.

Understand the components and calculation of bond prices including invoice price, clean price, and yield to maturity.

Analyze the effect of changing yield rates on bond prices over different maturity periods.

Calculate the market price of bonds given various coupon rates, face values, yields, and maturity dates.

Understand the concept of zero-coupon bonds and calculate their purchase price and yield.

---

Definitions:

Par Value

The face value of a bond or stock as stated by the issuer, which bears importance in the legal capital of a company.

Land

A physical, immovable property asset, representing the earth's surface not including bodies of water or resources below the surface.

Cash Dividend

A distribution of profits by a corporation to its shareholders in the form of cash.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares of stock, rather than cash.