Suppose that you decide to purchase either stocks or bonds of a particular corporation and you also prefer to receive some returns from the securities every year. Which should you buy - stocks or bonds? Why?
What will be an ideal response?
You should buy bonds because you would receive coupons payments each year from holding the bonds whether the corporation makes profits or not while there is no guarantee for any payment for holding stocks.
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A machine with a cost of $200,000 and accumulated depreciation of $100,000 is sold for $80,000 cash. The amount reported as a source of cash under cash flows from investing activities is
A. $20,000 B. $80,000 C. $100,000 D. zero; this is a financing activity E. zero; this is a operating activity
The multiplier measures the
A) number of steps it takes to move from one equilibrium to another. B) rise in saving resulting from a rise in income. C) marginal propensity to invest. D) rise in equilibrium GDP resulting from a one dollar rise in planned autonomous expenditures.