Why Did the Framers Insert the Interstate Compact Clause into the Constitution

question 8

Multiple Choice

Why did the framers insert the interstate compact clause into the Constitution?

• A) to prevent the emergence of coalitions of states that might threaten federal authority or the union itself
• B) to prevent any state from changing its boundaries without congressional approval
• C) to prevent states from abusing their authority in terms of their citizens
• D) to create a stalemate, which would make it too difficult for a state to create anything other than business arrangements with the other state
• E) to make it more difficult for states to work together, thus creating more checks and balances

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Definitions:

Business Risk

The exposure to factors that can lead to a reduction in the value of an investment or in the revenues of a business.

Systematic Risk

A risk that influences a large number of assets. Also called market risk.

Optimal Capital Structure

The best mix of debt and equity financing that minimizes the company's cost of capital and maximizes its value.

Weighted Average Cost of Capital

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted.