For a Corporation, Direct Investment from Owners Occurs When

question 22

Multiple Choice

For a corporation, direct investment from owners occurs when:

• A) it sells newly issued stock.
• B) its earnings are used for debt financing.
• C) it issues commercial paper.
• D) it pays dividend to its debenture holders.

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Definitions:

Perfect Competition

A market structure characterized by a large number of small firms, a homogenous product, perfect information, and easy entry and exit, leading to firms being price takers.

Marginal Decision Rule

A principle stating that an action should be taken if, and only if, the marginal benefit of the action exceeds its marginal cost.

Marginal Revenue

The extra revenue gained from the sale of an additional unit of a product or service.

Perfect Competition

A market structure characterized by many buyers and sellers, freedom of entry and exit, and a homogeneous product.