If the Interest Rate on a Loan Is Higher Than

question 136

Multiple Choice

If the interest rate on a loan is higher than the expected return from an investment,

• A) a rational firm will take out a loan for the investment.
• B) the Federal Reserve will conduct contractionary monetary policy.
• C) a rational firm will not take out a loan for the investment.
• D) the Federal Reserve will conduct expansionary monetary policy.
• E) the government will conduct expansionary fiscal policy.

Distinguish between the range, interquartile range, and variance, and understand when to use each measure.

Appreciate the importance of the interquartile range in reducing the impact of outliers.

Understand the limitations of the range as a measure of variability.

Calculate the interquartile range for a given data set.

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Definitions:

Agency Problems

Conflicts of interest that arise when agents (managers or executives) make decisions that benefit themselves rather than the principals (shareholders) they are supposed to represent.

Sole Proprietorships

A company that is both owned and managed by one person, where there is no legal separation between the proprietor and the business itself.

Secondary Market

The marketplace for the buying and selling of pre-owned securities or financial instruments.