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Unformatted text preview: Quiz 2- Chapter 1 Should financial decision makers do anything in their power to increase the wealth of the stockholders? NO! Subject to: Environmental, Regulatory, and Ethical constraints If markets were perfect, what adjustments would take place between a high wage and a low wage country? Workers would move from the low wage country to the high wage country wages in the high wage country would decline and in the low wage country they would rise this continues until wages are the same in both countries If markets were perfect, what adjustments would take place between a high interest rate country and a low interest rate country? Capital would flow out of the low interest rate country into the high interest rate country interest rates would begin to decline in the high interest country and begin to rise in the low interest country adjustment process would continue until interest rates are equal Why are markets imperfect in the real world? There are costs to getting information, costs involved in moving workers from one place to another, and barriers to the movement of goods, services, resources and capital...
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This note was uploaded on 07/15/2008 for the course FINC 445 taught by Professor Martindale during the Summer '08 term at Texas A&M.
- Summer '08