A Country Whose Financial Markets Function Poorly Is Likely to

question 66

Multiple Choice

A country whose financial markets function poorly is likely to

• A) efficiently allocate its capital resources.
• B) enjoy high productivity.
• C) experience economic hardship and financial crises.
• D) increase its standard of living.

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Definitions:

NPV

Net Present Value; a calculation that compares the present value of cash inflows to the present value of cash outflows over a period of time.

Break-Even Level

The point at which total costs and total revenue are equal, resulting in no net loss or gain, and the point at which a business, product, or service becomes profitable.

Net Present Value

A calculation used to determine the present value of a series of future cash flows by discounting them at a specific rate.

Initial Cash Outlay

The initial amount of money spent to make an investment or start a project, not counting ongoing expenses.