If Firms Are More Optimistic That Future Profits Will Rise

question 182

Multiple Choice

If firms are more optimistic that future profits will rise and remain strong for the next few years, then

• A)planned investment spending will fall.
• B)planned investment spending will rise.
• C)unplanned investment spending will remain unaffected.
• D)planned investment spending will rise and then fall.
• E)unplanned investment will rise.

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Definitions:

Par Value

The face value of a bond or stock, representing the amount that will be paid back at maturity.

Maturity Date

The date on which a financial instrument such as a bond or loan agreement is due to be repaid in full.

Sinking Fund Provision

A clause in a bond or other long-term debt instrument that requires the issuer to set aside funds regularly to repay the debt before it matures.

Bond Indenture

A legal contract specifying all the terms and conditions between a bond issuer and bondholder, including obligations, rights, and protections.