A Situation in Which There Is a Reduction in Quantity

question 298

Multiple Choice

A situation in which there is a reduction in quantity supplied to zero when there is the slightest decrease in price is

• A) perfectly elastic supply.
• B) perfectly elastic demand.
• C) perfectly inelastic supply.
• D) perfectly inelastic demand.

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Definitions:

Conversion Premium

The additional amount over the current value that an investor pays to convert a convertible security into a specified number of shares of common stock.

Conversion Ratio

The specific quantity of common shares an investor can receive for converting each unit of a convertible security, such as a convertible bond or preferred stock.

Par Value

The face value of a bond or stock, typically the amount that is paid back at maturity for bonds or a nominal dollar value assigned to shares of stock.

Coupon Bond

A type of bond that offers interest payments to the holder at specified intervals until the bond's maturity.