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 149 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?

Studies show that systolic blood pressure can be significantly lowered by taking statins. In fact, the higher the patient's baseline blood pressure, the greater the effect of statins on his or her blood pressure.

Did you know?

During the twentieth century, a variant of the metric system was used in Russia and France in which the base unit of mass was the tonne. Instead of kilograms, this system used millitonnes (mt).

Did you know?

Immunoglobulin injections may give short-term protection against, or reduce severity of certain diseases. They help people who have an inherited problem making their own antibodies, or those who are having certain types of cancer treatments.

Did you know?

Certain rare plants containing cyanide include apricot pits and a type of potato called cassava. Fortunately, only chronic or massive ingestion of any of these plants can lead to serious poisoning.

Did you know?

Less than one of every three adults with high LDL cholesterol has the condition under control. Only 48.1% with the condition are being treated for it.

A plastic MAP sensor used for training purposes showing the electronic circuit board and electrical ... A plastic MAP sensor used for training purposes showing the electronic circuit board and electrical ...
Gently squeeze/milk the arm with twisting motion. With oil or lotion on hands, use gentle but firm ... Gently squeeze/milk the arm with twisting motion. With oil or lotion on hands, use gentle but firm ...
Neck stretch. Rest the receiver’s head on the palm of your right hand, taking a firm hold on the ... Neck stretch. Rest the receiver’s head on the palm of your right hand, taking a firm hold on the ...
The first five reactions constitute the energy-investment phase of glycolysis The first five reactions constitute the energy-investment phase of glycolysis
Effect of Increasing the Investment Rate on the Steady State Effect of Increasing the Investment Rate on the Steady State
Effect of Increasing the Investment Rate on the Steady State Effect of Increasing the Investment Rate on the Steady State
Video: Double Vacuum Process (Illustration No Audio)

For a complete list of videos, visit our video library