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Is the debt level that maximizes a firm's expected EPS the same as the one that maximizes its stock price?
Wiki User
∙ 12y ago
the stock price will be maximized at a debt level that is lower than the EPS-maximizing debt level.
Answer From: https://umdrive.memphis.edu/cjiang/www/teaching/fir3410/Homework%20Solutions/im12.doc (12-15)
Wiki User
∙ 12y ago
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Why would a market that consisted entirely of perfectly competitive firms not be 'perfect'?
The concept of perfect competition is based on a large number of small firms, where no single firm can affect the market price. These firms operate as price takers, and use the cost supplied by the market. These ideal companies would insure efficiency. However, perfect competitive firms are unrealistic in real world scenarios.
Define price rigidity?
Price Rigidity is a condition where one follows a decrease in price but not an increase in price. This is due to the ability of other firms to match prices with it and it often leads to a kinked demand curve.
An increase in the aggregate price level will increase?
a clause in a contarct that automatically increases wages to account for increases in the price level
If both aggregate output and the aggregate price level increase what will happen?
a decrease in need which will in turn surplus the output and decrease the price level. then output will decrease.
If the price level doubles the value of money does what?
falls by 50%
What happens When the expected price level falls below the actual price level?
find it yourself
At the most profitable level of production a firms marginal cost will be the market price?
equal to
What are the main reasons that firms adjust their output when the price level change?
stillwagon everybody.
According to aggregate supply curve what happens as the price level increases?
firms have more of an incentive to increase output
What happens to the aggregate supply curve as the price level increases?
Firms have more of an incentive to increase output
Stockholder wealth maximization is called?
the appropriate goal for management decisions; considers the risk and timing associated with expected cash flows to maximize the price of the firms common stock
Going rate pricing?
All firms do have the power to fix a price ,but insteadof doing so,in a competitive market situation firms fix a price which is equal to the average price charged by all firms in an industry,ie,it collects all the prices firms with same product and compute the average.
Which term means the amount that firms will produce and sell at a specific price?
Quantity supplied is the amount that firms will produce and sell at a specific price.
Break even price?
Breakeven price is that price where firms are at no profit and no loss stage.
How do firms engage in price competition?
Firms might engage in price competition by advertising that they offer the lowest price on selected merchandise. Price competition lowers the selling price of the good, relative to competitors' prices.-From Usatestprep.com
An increase in the price level other things remaining the same may be expected to result in the consumption function?
A downward shift of
Competitive firms are assumed to do what?
Be price takers.
