When a Firm Is Regulated So That Its Price Enables

question 597

Multiple Choice

When a firm is regulated so that its price enables it to earn a specified target percent return on its capital, the regulation is called

• A) rate of return regulation.
• B) price cap regulation.
• C) earnings limited regulation.
• D) target pricing regulation.

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Definitions:

Financial Information

Data related to the financial performance and position of an entity, including income, expenses, assets, liabilities, and equity, typically used for analysis and decision making.

Neutral

In investment terms, indicates a position or outlook on a stock or market where no significant movement in either direction (upward or downward) is expected in the near term.

Royalty Contracts

Agreements where the owner of a certain property, patent, copyrighted work, or trademark allows another party to use it in exchange for an agreed upon payment(s) or royalties.

Compensation Contracts

Agreements specifying the terms of pay and benefits for an employee or executive, which may include salary, bonuses, stock options, and other forms of compensation.