Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
8th Edition
ISBN: 9781337368087
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 18, Problem 2PA
To determine
Why companies promote workers to hold large number of stocks of their company but not workers.
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Many workers hold large amounts of stock issued by the firms at which they work. Why do you suppose companies encourage this behavior? Why might a person not want to hold stock in the company where he works?
A company has announced a profit, but why is the price of stock still falling? Is the market inefficient? Explain.
Is maximizing a firm’s profits always identical to maximizing the firm’s stock market value?
Chapter 18 Solutions
Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
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- Does owning a share of stock in a company makes you a major decision maker for that company?arrow_forwardmany people think that the interest rate on a bond tells them all they need to know about how well off they are as a result of owning it. Explain the statement.arrow_forwardSuppose that the initial dividend on a stock is £1. The interest rate is 3 percent and the growth rate of dividends is constant at 2 percent. What is the price of the stock?arrow_forward
- What are the most liquid assets?arrow_forwardWhich has a higher average return over time: stocks, bonds, or a savings account? Explain your answer.arrow_forwardYou have two roommates who invest in the stock market. a. One roommate says she buy shares only in companies that everyone believes will experience big increases in profits in the future. How do you suppose the price-earnings ratio of these companies compares to the price-earnings ratio of other companies? What might be the disadvantage of buying shares in these companies? b. Another roommate says she only buys shares in companies that are cheap, which she measures by low price-earnings ratios. How do you suppose the earnings prospects of these companies compare to those of other companies? What might be the disadvantage of buying shares in these companies?arrow_forward
- What is a bond? A certificate representing a loan from an investor to a corporation or government entity that makes fixed payments for a set time and eventually pays back the loan in full. A certificate of ownership in a corporation with the right to a percentage of the earnings. A payment for an investor to a corporation for the rights to future profits. A group of stocks sold together for a set price.arrow_forwardSuppose that you have bought a total of 3200 shares of stock of a particular company. You bought 1200 shares of stock at $18 per share, 800 shares of stock at $10 per share, and the remaining shares at $21 per share. What is the average price you paid per share of stock? (please round your answer to 2 decimal places)arrow_forwardHow important is CFO in a rural bank? What he can do that others cannot?arrow_forward
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