If the Government Removes a Binding Price Ceiling from a Market,then

question 86

Multiple Choice

If the government removes a binding price ceiling from a market,then the price paid by buyers will

• A)increase,and the quantity sold in the market will increase.
• B)increase,and the quantity sold in the market will decrease.
• C)decrease,and the quantity sold in the market will increase.
• D)decrease,and the quantity sold in the market will decrease.

Calculate and interpret a firm’s debt-equity ratio and its implications on WACC.

Understand the relationship between beta, market risk premium, risk-free rate, and the cost of equity.

Apply the concept of WACC in investment decision-making processes.

Interpret the effect of taxes on the cost of capital.

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Definitions:

Z Distribution

The Z distribution is a normal distribution that has been standardized so that it has a mean of 0 and a standard deviation of 1; it's also known as the standard normal distribution.

Probability

A quantification of the chance of an event taking place, assigned a value between 0, which denotes that the event is impossible, and 1, which denotes absolute certainty of the event happening.

Uniform Distribution

A type of probability distribution where all outcomes are equally likely over a certain range.

Electronics Test

A process or methodology applied to identify the functionality, reliability, and performance of an electronic device or system.