Suppose That a Decrease in the Price of X Results

question 89

Multiple Choice

Suppose that a decrease in the price of X results in less of good Y sold. What are X and Y called?

• A) complementary goods
• B) normal goods
• C) inferior goods
• D) substitute goods

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Definitions:

Flotation Costs

Costs associated with the issuance of new securities by a firm, including charges for underwriting, legal services, and registration.

Gross Spread

The difference between the underwriting price received by the issuer of securities and the price at which the securities are sold to the public.

Oversubscription Privilege

A right given to current shareholders to purchase more shares of a new issue before it is offered to the public, usually at a discount.

Standby Privilege

A feature that may accompany preferred shares or bonds, allowing the holder the right to purchase additional shares at a fixed price.