Which of the Following Is True

question 100

Multiple Choice

Which of the following is true?

• A)Though not required by law, the government tends to run a balanced budget year after year.
• B)If there is a budget deficit, the government must borrow to pay for the excess spending.
• C)If there is a budget deficit, the government must ask the Fed to print money to finance excess spending.
• D)By law the federal budget must balance.
• E)If there is a budget deficit, the government must raise taxes.

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Definitions:

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.

Breakpoint

A volume discount in the sales charge or load of a mutual fund, offered to investors when investments exceed a specific dollar amount.