An Increase in the Marginal Cost Arising from a More

question 157

Multiple Choice

An increase in the marginal cost arising from a more complex specialized investment environment will cause the optimal contract length to:

• A) increase.
• B) decrease.
• C) remain constant.
• D) either increase or decrease.

---

Definitions:

Liquidity

The measure of how quickly and easily an asset can be converted into cash without significant loss of value.

Current Liabilities

Current liabilities are a company's debts or obligations that are due to be paid to creditors within one fiscal year.

Notes Payable

Written promises to pay a specified amount of money, typically with interest, by a certain date.

Maturity Value

The total amount that will be paid to the investor at the end of a fixed income security's term, including principal and interest.