A Person Has a Comparative Advantage in an Activity Whenever

question 160

Multiple Choice

A person has a comparative advantage in an activity whenever he or she

• A) has an absolute advantage in the activity.
• B) can perform the activity at a lower opportunity cost than can anyone else.
• C) can do the activity in less time than anyone else.
• D) can do everything better than anyone else.

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Definitions:

Yield-to-Maturity

The total return expected on a bond if held until its maturity date, accounting for its current market price, face value, interest rate, and time to maturity.

Marginal Tax Rate

A rephrasing: The portion of tax applied to your income for each additional dollar you earn.

Required Rate of Return

The minimum annual percentage return an investor expects to earn from an investment, considering its risk level.

Preferred Shares

A type of stock that provides holders with a fixed dividend, which must be paid before dividends are paid to ordinary shareholders.