Special-Interest Programs Are Highly Attractive to Vote-Seeking Politicians Because

question 64

Multiple Choice

Special-interest programs are highly attractive to vote-seeking politicians because

• A) these programs are highly efficient, and therefore, they tend to enhance the general welfare of the populace.
• B) members of special interest groups favoring these programs are less likely to vote than the taxpayers who pay for them.
• C) low-income recipients are the primary beneficiaries of special-interest programs.
• D) members of special interest groups favoring these programs feel strongly about them while most other voters are rationally uninformed about them.

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Definitions:

Weight of Preferred Stock

The proportion of preferred stock in a company’s capital structure, used in calculating the cost of capital or investment risk.

Weighted Average Cost of Capital

A calculation that reflects the cost of a company's capital, including equity and debt, weighted by their proportion in the total capital structure.

Bond Issue

The process by which a company, government, or other organization raises funds by issuing bonds to investors, who essentially lend money to the issuer in exchange for periodic interest payments and the return of principal at maturity.

Weight of Debt

A component of a firm's capital structure that quantifies the proportion of total capital represented by debt.