Which Statement Is True Regarding Any Assertion by Rachel's Parents

question 63

Multiple Choice

Which statement is true regarding any assertion by Rachel's parents that a warning should have been affixed to the product itself to warn adults as well as children?

• A)Most state laws provide that manufacturers are not required to affix warnings directly to a product.
• B)If parties other than the original purchasers will likely use the product,a warning should be placed directly on the product itself.
• C)Court cases hold that warnings on a product are not required so long as the purchaser is given an instructional pamphlet setting forth warnings.
• D)There is a federal law that provides that manufacturers are not required to affix warnings directly to a product.
• E)Rachel's parents cannot complain because they did not purchase the squirt gun.

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Definitions:

Optimal Level

The most favorable point, amount, or degree of something for a particular situation, which maximizes efficiency or returns.

M&M Proposition II

Part of the Modigliani-Miller theorem on capital structure, stating that the cost of equity increases with higher levels of debt, as a consequence of the increased risk taken by equity holders.

Cost of Equity

The compensation that investors demand for bearing the risk of owning stock, usually reflected by earnings or dividend growth expectations.

Required Rate of Return

The minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project.