Suppose That There Are Two Industries,A and B

question 89

Multiple Choice

Suppose that there are two industries,A and B. There are five firms in industry A with sales at $5 million, $2 million, $1 million, $1 million, and $1 million, respectively. There are four firms in industry B with equal sales of $2.5 million for each firm. The four-firm concentration ratio for industry A is:

• A) 0.9.
• B) 1.0.
• C) 0.8.
• D) 0.7.

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Definitions:

Call Provision

A clause in a bond or other fixed-income security that allows the issuer to repay the principal before the maturity date.

Sinking Fund

A savings fund into which an organization sets aside money over time, intended to pay off a debt or bond at its maturity or to meet a future capital expense.

Subordinated

A ranking of debt that places this type of debt lower than other debts in terms of claims on assets or earnings, typically in the context of bankruptcy or liquidation.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back later, often with interest.