Mike's Mopeds Used Internal Financing as a Source of Long-Term

question 5

Multiple Choice

Mike's Mopeds used internal financing as a source of long-term financing for 70% of its total needs in 2014. The company borrowed an additional 20% of its total needs in the long-term debt markets in 2014. What were Mike's net new stock issues, in percentage terms, for 2014?

• A) -10%
• B) -5%
• C) 5%
• D) 10%
• E) 15%

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Definitions:

Monopolized

Dominated or controlled entirely by a single entity, often in reference to a market situation where one firm holds the majority market share.

Lerner Index

A measure of a firm's market power and pricing strategy, defined as the difference between price and marginal cost, scaled by price.

Elastic

Describes a situation where the quantity demanded or supplied of a good or service changes significantly in response to price changes.

Inelastic Demand

Describes a situation where the demand for a product does not change significantly in response to a change in the product's price.