Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 26, 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 26 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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- many 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_forwardWhich has a higher average return over time: stocks, bonds, or a savings account? Explain your answer.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_forwardSuppose you buy a house for $250,000. One year later, the market price for the house has fallen to $200,000. What is the return on your investment in the house if you made a down payment of 10 percent and took out a mortgage loan for the other 90 percent? Use the editor to format your answerarrow_forward
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