Principles of Macroeconomics 7th Edition

Published by South-Western College
ISBN 10: 1-28516-591-8
ISBN 13: 978-1-28516-591-2

Chapter 13 - Saving, Investment, and the Financial System - Quick Check Multiple Choice - Page 279: 1

Answer

d) David = stockholder, Max = bondholder

Work Step by Step

A bond is a certificate of indebtedness, meaning that a bond issuer promises to pay back a loan with interest. Nina's sells a bond to Max as 'debt finance', meaning that Max is a bondholder. A stock is a claim to profits made by a firm. David is a stockholder because Nina has promised him a third of her profits.
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