ECO 550 MIDTERM QUESTION AND ANSWER - 1 Income tax payments...

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1. Income tax payments are an example of ____. 2. The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn? 3. Recently, the American Medical Association changed its recommendations on the frequency of pap-smear exams for women. The new frequency recommendation was designed to address the family histories of the patients. The optimal frequency should be where the marginal benefit of an additional pap-test. 4. Which of the following will increase (V0), the shareholder wealth maximization model of the firm: V0 (shares outstanding) = Σ∞t=1 (π t ) / (1+ke)t + Real Option Value . 5. The closest example of a risk-free security is 6. The standard deviation is appropriate to compare the risk between two investments only if 7. he ____ is the ratio of ____ to the ____ 8. Based on risk-return tradeoffs observable in the financial marketplace, which of the following securities would you expect to offer higher expected returns than corporate bonds?
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