Exhibit 3-1 -Consider the Market Described by the Schedule in Exhibit 3-1

question 73

Multiple Choice

Exhibit 3-1
-Consider the market described by the schedule in Exhibit 3-1. At a price of $5 per unit,

• A)the quantity traded is 1,000 units.
• B)there is a shortage.
• C)the quantity sold is 1,800 units.
• D)there is a surplus of 1,100 units.
• E)the quantity purchased is 1,000 units.

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Definitions:

Recent Dividend

The latest distribution of a portion of a company's earnings to its shareholders.

Cost of Capital

The imperative return rate a firm has to achieve on investment initiatives to retain its market worth and draw investment.

Target Capital Structure

The capital structure that management strives to maintain as new capital is raised. An estimate of the structure that maximizes stock price.

Preferred Stock

A category of equity in a company that ranks above common stock in terms of claims on assets and profits, typically involving stable dividend payments.