Which of the Following Theories Explains Why Increased Education Translates

question 156

Multiple Choice

Which of the following theories explains why increased education translates to higher wages?

• A)human capital theory only
• B)signalling theory only
• C)both human capital and signalling theory
• D)none of the above

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Definitions:

Bond Issuer

An entity, such as a corporation or government, that issues bonds to raise funds from investors.

Bondholder

An investor who owns bonds issued by corporations or governments, thereby lending money to the issuer in return for periodic interest payments and the return of principal at maturity.

Annual Coupon Rate

The interest rate a bond pays its holder, expressed as a percentage of its face value and payable annually.

Bond

A fixed-income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental, which includes terms regarding the interest rate and when the loaned funds (bond principal) must be paid back (maturity).