With Respect to Events Like Global Warming Some Economists Suggest

question 13

Multiple Choice

With respect to events like global warming some economists suggest using falling discount rates because

• A) exponential discounting virtually gives no weight to (large) costs incurred far into the future.
• B) exponential discounting weights (large) costs incurred far into the future heavily.
• C) events far in the future do not affect us.
• D) we should not care about costs far in the future.

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Definitions:

Issue Price Over Par

Occurs when a security, typically a bond, is sold at a price higher than its face value.

Preferred Stock

A class of shares which typically provides a fixed dividend and has priority over common stock in the distribution of assets during liquidation.

Shares

Shares representing ownership rights in a corporation or financial asset, guaranteeing a fair share of profits through dividends, if declared.

Par Common Stock

This represents the nominal or face value assigned to common stock shares, which is the minimal amount shareholders must contribute and is not necessarily related to the market value.