If the Present Value of All Future Profit Is Positive

question 54

Multiple Choice

If the present value of all future profit is positive, then

• A)the firm should remain operating, even if it earns negative profit in the short run.
• B)the firm should shut down if it is earning a negative profit in the short run.
• C)the firm should shut down if it cannot cover its fixed costs in the short run.
• D)None of the above.

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Definitions:

Solicitation

The act of requesting or seeking to obtain something, often used in a legal context involving the procurement of goods, services, or funds.

Proxies

Agents authorized to act on behalf of others, particularly in voting at shareholder meetings.

SEC

The Securities and Exchange Commission, a U.S. federal agency responsible for regulating the securities industry and enforcing federal securities laws.

Fraud in Securities Transactions

Illegal activities involving deceit or concealment in the buying, selling, or trading of securities, aimed at gaining a financial advantage.