Which of the Following Statements Best Describes the Relationship Between

question 2

Multiple Choice

Which of the following statements best describes the relationship between public opinion and government policy?

• A)Public opinion always shifts in opposition to government policy once the policy has been implemented.
• B)Public opinion always shifts in favor of government policy once the policy has been implemented.
• C)Shifts in public opinion always lead to changes in government policy.
• D)Although there is no one-to-one correlation between public opinion and government policy, shifts in public opinion on particular issues frequently lead to changes in government policy.

Understand principles of financial mathematics and their application in calculating interest rates and returns on investments.

Calculate effective and nominal rates of interest for various compounding frequencies.

Apply the concept of present value and future value in evaluating investment options and loan terms.

Analyze annuities, their future values, and the interest rates associated with them.

---

Definitions:

Optimal Level

The most favorable point, amount, or degree of something for a particular situation, which maximizes efficiency or returns.

M&M Proposition II

Part of the Modigliani-Miller theorem on capital structure, stating that the cost of equity increases with higher levels of debt, as a consequence of the increased risk taken by equity holders.

Cost of Equity

The compensation that investors demand for bearing the risk of owning stock, usually reflected by earnings or dividend growth expectations.

Required Rate of Return

The minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project.