This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Comment on the following statement: When a firm retains earnings for investment purposes, it is ... (Read 89 times)

j.rubin

  • Hero Member
  • *****
  • Posts: 557
on: Jun 29, 2018
Comment on the following statement: When a firm retains earnings for investment purposes, it is actually saving on behalf of its shareholders.
 
  What will be an ideal response?

Question 2

Why does the absence of well-defined property rights serve as a stumbling block for the application of the Coase theorem?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

ultraflyy23

  • Sr. Member
  • ****
  • Posts: 312
Reply #1 on: Jun 29, 2018
Answer to Question 1

The statement is true. If the firm did not retain its profits, it would distribute them to shareholders in the form of dividends. Households could then decide whether to save these funds or spend them. Thus, by making the decision to hold onto a portion of its profits, it is making the decision to save these profits on behalf of its shareholders.

Answer to Question 2

Well-defined property rights are necessary in order for the possibility of
Bargaining between parties. If property rights are not well-defined there really
would be no point in bargaining.


j.rubin

  • Hero Member
  • *****
  • Posts: 557
Reply #2 on: Jun 29, 2018
Correct answers!


ultraflyy23

  • Sr. Member
  • ****
  • Posts: 312
Reply #3 on: Jun 29, 2018
Great! Please up vote :D


« previous next »
 

Did you know?

Thyroid conditions may make getting pregnant impossible.

Did you know?

Signs of depression include feeling sad most of the time for 2 weeks or longer; loss of interest in things normally enjoyed; lack of energy; sleep and appetite disturbances; weight changes; feelings of hopelessness, helplessness, or worthlessness; an inability to make decisions; and thoughts of death and suicide.

Did you know?

There are more nerve cells in one human brain than there are stars in the Milky Way.

Did you know?

Although the Roman numeral for the number 4 has always been taught to have been "IV," according to historians, the ancient Romans probably used "IIII" most of the time. This is partially backed up by the fact that early grandfather clocks displayed IIII for the number 4 instead of IV. Early clockmakers apparently thought that the IIII balanced out the VIII (used for the number 8) on the clock face and that it just looked better.

Did you know?

Illness; diuretics; laxative abuse; hot weather; exercise; sweating; caffeine; alcoholic beverages; starvation diets; inadequate carbohydrate consumption; and diets high in protein, salt, or fiber can cause people to become dehydrated.

An investment versus a bill An investment versus a bill
Average Hourly Earnings of U.S. Workers in Current and Constant Dollars Average Hourly Earnings of U.S. Workers in Current and Constant Dollars
Reaction 3: The Second Investment of ATP Reaction 3: The Second Investment of ATP
Effect of Increasing the Investment Rate on the Steady State Effect of Increasing the Investment Rate on the Steady State
Management Information Systems: Managing the Digital Firm, 15th Edition Management Information Systems: Managing the Digital Firm, 15th Edition
Consider a two-period economy with no investment opportunities: first and second period output ... Consider a two-period economy with no investment opportunities: first and second period output ...
Video: Wound Cultures

For a complete list of videos, visit our video library