Which One of the Following Best Fits the Description of a Private

question 30

Multiple Choice

Which one of the following best fits the description of a private placement?

• A)5-year commercial bank loan
• B)10-year loan from an insurance company
• C)2-year direct business loan
• D)3-year loan to a firm by its original founder
• E)20-year bonds sold in the public markets

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Definitions:

Public Choice Theory

An economic theory that applies principles of economics to analyze political behavior and decision-making.

Government Failure

Occurs when the government becomes the tool of the rent seeker and the allocation of resources is made even less efficient by the intervention of government.

Profit-maximizing Number

The output level at which a firm achieves the highest possible profit, where marginal cost equals marginal revenue.

Rent Seeker

An individual or entity that seeks to increase their share of existing wealth without creating new wealth, often through manipulation of the economic environment.