“Plowback” is a preferred source of financing a corporation because
A. the funds are easier to obtain, compared to issuing stocks.
B. it is not subject to double taxation.
C. selling bonds involves the high cost of money.
D. stock markets are subject to random walks.
Answer: A
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Suppose an individual firm is comparing two investments, a one year bond from a U.S. firm paying 4% or a one year bond from a German firm which is paying 6%. The current dollars-per-euro rate is 0.75, and the expected rate in one year is 0.72
If the expected rate is correct, which investment will receive the higher return? A) The U.S. Bond B) The German Bond C) They will have the same return. D) This cannot be determined from the information given.
Which of the following are capital goods?
a. land and raw materials b. all manufactured goods c. automobiles and houses d. factories and machinery e. all goods consumed by both firms and households