The Mayan Calendar Co

question 116

Multiple Choice

The Mayan Calendar Co. intends to liquidate all of its assets at the end of 2012 and pay out the proceeds as one giant dividend of $1,000 per share. For an investor who required a 10% rate of return, the value of Mayan stock on January 1 2012 would have been

• A) $1,100.
• B) $1,000.
• C) $909.09.
• D) Such a stock would have no value at all.

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Definitions:

Equilibrium Quantity

The quantity of goods or services supplied in the market at which the quantity demanded equals the quantity supplied, leading to a stable market price.

Supply

The total amount of a good or service that is available for purchase at any given price level.

Demand

The extent of a good or service that patrons are inclined and have the ability to secure at different price ranges over a set period.

Substitute

A product or service that can be used in place of another, offering consumers an alternative choice.