Which of the Following Is NOT a Reason Advanced for the Existence

question 56

Multiple Choice

Which of the following is NOT a reason advanced for the existence of comparative advantages within financial markets?

• A)The imposition of larger credit risk premiums by long-term investors, relative to those imposed by shorter-term investors.
• B)Smaller credit risk premiums are appropriate in short-term financing because of the shorter repayment period.
• C)Taxes and regulation may impact borrowers differently.
• D)Indifference regarding the risk profile of borrowers in some markets.
• E)Some borrowers will have a 'home-ground advantage'.

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Definitions:

Common Dividend Payable

is a liability recorded on a company’s balance sheet representing the amount of dividends declared by the board of directors to be paid out to common stockholders.

Stock Dividend

A distribution of a corporation's earnings to its shareholders in the form of additional shares, rather than cash.

Total Equity

The residual interest in the assets of a business after deducting liabilities, representing the shareholders' ownership interest.

Retained Earnings

Retained Earnings are the portion of a business's profits not distributed to shareholders as dividends, but kept in the company to reinvest in the business or pay off debt.