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Which of the Following Statements Is TRUE

question 46

Multiple Choice

Which of the following statements is TRUE?
I. Excludability leads to efficiency.
II. The benefits of public goods provide an argument for government provision of these goods.
III. Taxation turns some people into free riders.


Definitions:

Cost of Capital

The rate of return a company must pay to its securities holders, serving as the opportunity cost of using capital resources for an investment.

Annual Coupon

The yearly interest payment made to bondholders, typically expressed as a percentage of the face value.

Bankruptcy Claims

Rights to payment held by creditors from a company undergoing bankruptcy proceedings.

Debt/equity Ratio

The proportionality ratio of debt to equity in the context of funding a company's assets.

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