If the present value equation used to calculate the price of a stock you are considering buying is "[$7 / (0.04 - 0.03)]," which of the following is correct, assuming that dividends will grow at a constant rate?
A) The stock price is $7, the dividend growth rate is 3 percent, and the interest rate is 1 percent.
B) The stock price is $700, the dividend growth rate is 3 percent, and the interest rate is 4 percent.
C) The dividend is $7 per share, the dividend growth rate is 1 percent, and the interest rate is 4 percent.
D) The dividend is $7 per share, the dividend growth rate is 4 percent, and the interest rate is 3 percent.
B
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The long-run supply curve for a firm in a perfectly competitive industry is:
A) negatively sloped. B) positively sloped. C) vertical. D) horizontal.
Giffen goods
A) have not existed since prior to the Industrial Revolution. B) were proven to exist in the 1890s by Sir Robert Giffen. C) were not shown to actually exist until 2006. D) are theoretical and have never been discovered in the real world.