Phillip Was Waiting for a Bus at a Bus Stop

question 15

Multiple Choice

Phillip was waiting for a bus at a bus stop.Across the street and down the block,a mechanic negligently overinflated a tire he was intending to put onto Marsha's pickup truck.The exploding tire injured Marsha and frightened a neighborhood dog,which ran down the street and knocked Phillip down,injuring his knee.Phillip sued the mechanic.In applying the Palsgraf v.Long Island Railroad decision to this case,Phillip would

• A)win because the mechanic was negligent in overinflating the tire,which led to Phillip's injury.
• B)win based on negligence per se.
• C)lose because the court would apply the doctrine of res ipsa loquitur.
• D)lose because,although the mechanic's conduct was negligent toward Marsha,it was not a wrong in relation to Phillip,who was far away.The mechanic could not have foreseen injury to Phillip and therefore had no duty to him.

Understand the role of real options in strategic investment decisions.

Understand the benefits and drawbacks of export promotion and import substitution policies for economic growth.

Analyze the implications of opening economies to free trade for developing countries.

Identify the role of various organizations and programs in coordinating and providing aid.

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Definitions:

Market Efficiency

A financial theory stating that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns.

Efficient Capital Market

Market in which security prices reflect available information.

Security Prices

The cost or price of financial instruments such as stocks, bonds, and derivatives, determined by market supply and demand.

Compound Return

The process by which an investment grows over time as earnings from both the principal and the accumulated earnings from preceding periods.