The Law of Conservation of Value Implies That

question 19

Multiple Choice

The law of conservation of value implies that
I.the mix of common stock and preferred stock does not affect the value of the firm;
II.the mix of long-term and short-term debt does not affect the value of the firm;
III.the mix of secured and unsecured debt does not affect the value of the firm

• A)I only
• B)II only
• C)III only
• D)I, II, and III

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Definitions:

Sherman Antitrust Act

is a landmark federal statute in the U.S passed in 1890 that prohibits certain anti-competitive business activities and requires the federal government to investigate and pursue trusts.

Clayton Act

A U.S. antitrust law enacted in 1914, aimed at promoting competition and preventing monopolies by prohibiting anti-competitive practices.

Oligopoly

A market structure characterized by a small number of firms controlling the majority of the market share, leading to limited competition.

Monopolistic Competition

A market structure characterized by many firms offering products that are similar but not identical, allowing for some degree of market power.