Which of the Following Is Not Correct

question 156

Multiple Choice

Which of the following is not correct?

• A)Earnings from capital may be paid to households in the form of dividends.
• B)Earnings from capital may be retained by firms to purchase additional capital.
• C)Firms may not pay out all of their earnings to households.
• D)Firms earn the highest profits when the owners of capital receive a value above the marginal product.

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Definitions:

Coupon Rate

The annual interest rate paid by a bond issuer to its bondholders, expressed as a percentage of the bond's face value.

Inflation Rate

The speed at which prices for products and services ascend, resulting in a decline in how much can be bought.

Market Conversion Value

The value of a convertible security if it is converted into a different form, usually stock, at its current market price.

Conversion Ratio

The number of common shares received upon the conversion of a convertible security, such as a convertible bond or preferred stock.