In Some Industries,competitive Dynamics Eventually Drive Long-Run Projections of the Future

question 53

Multiple Choice

In some industries,competitive dynamics eventually drive long-run projections of the future returns earned by the firm to an equilibrium level equal to the long-run expected cost of equity capital in the firm.At that point,a firm can be expected to earn ____________ residual income in the future.

• A) increasing
• B) zero.
• C) decreasing
• D) There is not enough information to answer this question

---

Definitions:

Current Employees

Individuals who are actively working for an organization at a given time.

Government Fund

A financial allocation from the government aimed at supporting specific projects, sectors, or initiatives, often involving public resources.

Cafeteria-Style Benefits Plans

Allow employees to choose those benefits they really want.

Adverse Selection

A situation in economics and insurance where a party’s lack of information leads to a transaction with another party who has a distinct advantage, often seen in markets for goods like used cars or in health insurance.