Market Stabilization

question 13

Multiple Choice

Market stabilization

• A) is the action by the managing investment banker to keep the price of newly issued securities from falling below the issue price to the public.
• B) usually lasts 2-3 days but can last up to 30 days if a security is difficult to distribute.
• C) cannot always keep prices of securities from falling-a case in point was the IBM issue, sold in October, l979.
• D) all of these.

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Definitions:

Wage Rate

The amount of money a worker is paid per unit of time, such as an hour or a month.

Marginal Cost

The cost related to the production of an additional unit of a product or service.

Price Taker

A seller (or buyer) that is unable to affect the price at which a product or resource sells by changing the amount it sells (or buys).

Monopolistic Competitor

A firm in a market where many competitors sell products that are differentiated from one another and hence are not perfect substitutes.