The Following Question Are Based on the Following Information

question 21

Multiple Choice

The following question are based on the following information:

-If intended spending exceeds the total value of final goods and services produced

• A) GDP falls.
• B) firms cut back on their production rates.
• C) inventories will be depleted faster than firms desire.
• D) the aggregate supply curve must be vertical.
• E) depreciation exceeds investment.

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Definitions:

Striking Price

The predetermined price at which the holder of an option contract can buy (call) or sell (put) the underlying asset.

Callable Bonds

Callable bonds are bonds that can be redeemed by the issuer prior to their maturity date at a specified call price.

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company's shares at certain times during its life, usually at the discretion of the bondholder.

Warrants

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a security, usually equity, at a predetermined price before expiration.