What Is the AA-Curve

question 10

Essay

What is the AA-curve?
Why does it have a negative slope?
What factors cause it to shift?

---

Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Common Shares

Equity securities that represent ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Preferred Shares

A class of stock that provides shareholders with a priority claim on assets and earnings before common stockholders, usually including fixed dividend payments.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares.