Table 3-26 Assume That Japan and Korea Can Switch Between Producing Cars

question 516

Multiple Choice

Table 3-26
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
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-Refer to Table 3-26. Assume that Japan and Korea each has 2400 hours available. If each country spends all its time producing the good in which it has a comparative advantage and trade takes place at a price of 12 cars for 6 airplanes, then

• A)Japan and Korea will both gain from this trade.
• B)Japan will gain from this trade, but Korea will not.
• C)Korea will gain from this trade, but Japan will not.
• D)neither Japan nor Korea will gain from this trade.

Calculate and interpret book value per share, its significance and compare it to market and liquidation values.

Identify the roles of different types of analysts and their methodologies in assessing firm value.

Understand and apply the concept of the market capitalization rate and its implications on stock evaluation.

Calculate the intrinsic value of stocks using dividend discount models.

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