You Are Trying to Decide Whether to Purchase the Latest

question 85

Multiple Choice

You are trying to decide whether to purchase the latest Harry Potter book online or borrow it from the library. There is no charge for borrowing a book from the library, but going to the library takes more time than ordering a book online. Regardless of how you get the book, its benefit to you is the same. If the cost of buying the book online is $13, then you should:

• A)borrow the book from the library because you can get it from the library for free.
• B)borrow the book from the library if the cost of doing so (in terms of the extra time it takes)is less than $13.
• C)borrow the book from the library if the cost of doing so (in terms of the extra time it takes)is greater than $13.
• D)buy the book online because it takes less time.

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Definitions:

Preferred Stock

A type of stock that provides a specific dividend that is paid before any dividends are paid to common stockholders, and that typically does not have voting rights.

Common Stock

A type of equity ownership in a corporation, representing a claim on a portion of the profits and assets, and giving voting rights in corporate decisions.

Net Income

The total profit of a company after all revenues, costs, and expenses have been deducted.

Stock Option Information

Details and specifics regarding stock options, which are securities granting the holder the right to purchase or sell stock at a specified price within a defined time period.