New Growth Theory Argues That

question 136

Multiple Choice

New growth theory argues that

• A) growth is due to the proper government policies concerning interest rates.
• B) growth relies on maintaining lower growth rates of population, especially in less developed countries.
• C) technology cannot be looked at as an outside factor without an explanation of what drives it.
• D) technology is the key factor that explains growth but technology is beyond economic explanation itself.

Calculate the approximate MIRR of a project and understand its implications.

Recognize the technical problems associated with the IRR method.

Grasp the significance of a firm's cost of capital in evaluating investment projects.

Understand the implications of NPV and IRR for project selection under capital rationing.

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Definitions:

Maturity

Maturity refers to the date on which the principal or final payment is due on a debt instrument, after which the debt is considered repaid.

Futures Position

A contractual obligation to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

Underlying Commodity

The basic physical asset upon which futures contracts and derivatives are based.

Maturity

The specified date on which the principal amount of a bond, loan, or other financial instrument is due to be repaid.