In Some Industries,competitive Dynamics Eventually Drive Long-Run Projections of the Future

question 53

Multiple Choice

In some industries,competitive dynamics eventually drive long-run projections of the future returns earned by the firm to an equilibrium level equal to the long-run expected cost of equity capital in the firm.At that point,a firm can be expected to earn ____________ residual income in the future.

• A) increasing
• B) zero.
• C) decreasing
• D) There is not enough information to answer this question

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Definitions:

Credit Terms

Credit terms are the payment conditions set by businesses regarding when and how buyers should pay for goods or services, often specifying the period and any discount for early payment.

Early Payment Discount

An incentive offered by sellers to buyers for paying an invoice earlier than the stated due date to improve cash flow.

Trade Discount

A reduction in the list price granted to customers, often based on volume of purchase or early payment, and not recorded separately in financial accounts.

Government Agencies

Public sector entities that are established to perform specific functions or services on behalf of a government.