A Share of Stock Resembles a Consol in All of the Following

question 88

Multiple Choice

A share of stock resembles a consol in all of the following ways except that the:

• A) share of stock does not have a maturity date.
• B) annual dividend the stock pays resembles the coupon on a consol.
• C) prices of both can be computed using a variation of the net present value formula.
• D) are both residual claims.

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Definitions:

Inefficiency Or Unemployment

Situations where resources are not fully utilized in the economy, leading to joblessness and wastage of economic potential.

Bowed-Out Frontier

A graphical representation of an economy’s maximum output possibilities that show increasing opportunity costs, resulting in a curve that bows outward.

Opportunity Cost

The value of the best alternative forgone when a decision is made to choose one option over others.

Attainable Combination

An attainable combination is a set of goods or services that can be produced or provided with the available resources and technology, without overextending production capabilities.