The fact that common stockholders are residual claimants means the stockholders:
A. receive their dividends before any other residuals are paid.
B. have a claim against the revenue that remains after everyone else is paid.
C. are paid any past due dividends before other claims are paid.
D. are paid before the bondholders but after any taxes are paid.
Answer: B
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The principle involved in short-run uncovered interest parity is that home interest rates will be equal to:
A) the world equilibrium real rate of interest. B) the foreign interest rate minus foreign inflation. C) the foreign rate of interest plus the expected rate of depreciation of the home currency. D) the domestic nominal rate of interest plus domestic inflation.
If a country has a capital and financial account deficit, that country's stock of international indebtedness is
A) increasing. B) decreasing. C) constant. D) zero.