Alex Received a Four-Year Scholarship to State U

question 6

Multiple Choice

Alex received a four-year scholarship to State U. that covered tuition and fees, room and board, and books and supplies. If Alex becomes a full-time student, then:

• A) attending State U. for four years is costless for Alex.
• B) Alex has no incentive to study hard while at State U.
• C) the opportunity cost of attending State U. includes the money Alex could have earned working for four years.
• D) the opportunity cost of attending State U. includes the sum of the benefits Alex would have had from attending each of the other schools to which he was admitted.

---

Definitions:

Retained Earnings

Part of a company's profit that is held or retained and saved for future use, reinvestment, or to pay debt rather than being paid out as dividends to shareholders.

Common Stock

A type of security that represents ownership in a corporation, entitling the holder to vote on corporate matters and receive dividends.

Statement of Stockholders' Equity

A financial statement that shows changes in the value of a company's shareholders' equity over a specific period through items such as net income, dividend payments, and share repurchases.

Common Stock

A type of security that represents ownership in a corporation, giving holders a share of the profits in the form of dividends.