Both the Theory of Comparative Advantage in Production and the H-O

question 48

Multiple Choice

Both the theory of comparative advantage in production and the H-O theory provide ______ as a basis for international trade.

• A) factor endowments
• B) trade surplus theory
• C) foreign direct investment
• D) managed trade theory
• E) trade deficit theory

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Definitions:

Unlevered Cost of Capital

The cost of capital for a company that has no debt, representing its cost of equity.

Financial Leverage

The use of borrowed funds to increase the potential return of an investment.

All Equity Firm

A business that is financed entirely through equity capital, with no debt or borrowed funds.

Repurchase Shares

The action by a company to buy back its own shares from the marketplace, reducing the amount of outstanding stock.