How Did European Governments Help Airbus Aggressively Pursue a 50

question 26

Multiple Choice

How did European governments help Airbus aggressively pursue a 50% market share in its early years of operation?

• A)Subsidies
• B)High-interest loans
• C)Helping to ensure scope economies from military aircraft division
• D)Paying in excess of cost for military aircraft
• E)Guaranteeing a set level of annual aircraft purchases

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Definitions:

Expectations Theory

With respect to dividends: a dividend that’s lower than expected will be taken as a negative by investors even if it is larger than previous dividends. A variation on the signaling effect of dividends. With respect to interest rates: A theory explaining the shape of the yield curve. The curve slopes up or down depending on whether expectations about future interest and inflation rates are increasing or decreasing.

Signaling Effect

The signaling effect refers to the idea that actions by a company can provide information to investors about its future prospects.

Dividend Increase

An action by a company to raise the amount of money paid to its shareholders as dividends.

Residual Dividend Theory

A policy where dividends are based on earnings left over after all operating and expansion expenses are covered.