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Patents are granted in order to encourage firms to invest in the research and development of new products. Patents are an example of:
Suggested Answer: A
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Choice 'a' is correct. 7.0 percent cost of funds from retained earnings.
The cost of retained earnings is equal to the rate of return required by the firm's common shareholders (or, in effect, the return 'lost' by them when the firm chooses to fund with retained earnings). While oftentimes this rate is somewhat subjective, we are given the facts to exactly answer the question in this case. The stock is currently selling for $100/share, and the dividend is given at $7/share.
$7 / $100 = 7%
Choices 'b', 'c', and 'd' are incorrect, per the above Explanation:/calculation.
32 comments · newest first
GW
Gwenn
10 months ago
I thought collusion was the main issue here, not patents.
AS
Ashton
11 months ago
Wait, are patents really just about protecting ideas?
IR
Irving
11 months ago
Totally agree, they create exclusionary practices!
EM
Emilio
11 months ago
I think they're more about entry barriers.
LA
Lawrence
11 months ago
Patents definitely encourage R&D investment.
GL
Glory
12 months ago
I thought collusion was more about companies working together, not about patents. This is tricky!
CA
Candra
12 months ago
I practiced a question about market concentration and patents, but I feel like entry barriers make more sense here.
MO
Moon
12 months ago
I'm not entirely sure, but I remember something about exclusionary practices being linked to patents. Could that be right?
RE
Reid
1 year ago
I think patents might relate to entry barriers since they prevent others from making the same product for a while.
LE
Leonor
1 year ago
I'm a bit confused by this question. The options don't seem to directly match the explanation about patents encouraging R&D. I'll have to re-read the question and think about how patents relate to market competition. Hopefully I can eliminate a couple options and make an educated guess.
FR
Franklyn
1 year ago
Okay, let me see. Patents are meant to incentivize R&D, so I think the right answer has to be something about encouraging investment in new products. I'm leaning towards B, "entry barriers," since that seems to capture the idea of protecting the firm's position in the market.
JA
Janna
1 year ago
Hmm, I'm not totally sure about this one. I know patents have something to do with encouraging new products, but I'm not sure if that's the same as "entry barriers." I'll have to think this through carefully.
TA
Taryn
1 year ago
This seems like a straightforward question about the purpose of patents. I'm pretty confident I know the answer - patents are a way to encourage innovation by giving firms a temporary monopoly.
MA
Marsha
1 year ago
Hmm, this seems straightforward. I think I'll go with option B and install the Connected Machine agent on the on-premises computers.
AR
Arlene
1 year ago
Ugh, I'm drawing a blank on this one. I'll have to come back to it and see if I can eliminate some of the options.
AM
Amber
1 year ago
Hmm, I'm a little unsure about this one. The question is asking about who is responsible for coding patient charts, but I'm not totally clear on the differences between the roles listed. I'll have to think this through carefully.
PA
Paola
1 year ago
Alright, time to channel my inner patent attorney. I'm feeling confident about B - those entry barriers ain't gonna build themselves!
EL
Elena
1 year ago
Patents, huh? I wonder if they have one for making really good coffee. That's the kind of innovation I can get behind!
EL
Elouise
1 year ago
Hold up, is this a trick question? Aren't patents the opposite of collusion? I'm going with C.
LA
Layla
1 year ago
C) Exclusionary practices.
LI
Lili
1 year ago
B) Entry barriers.
JO
Jolene
1 year ago
A) Market concentration.
AL
Allene
1 year ago
I'm not sure, but I think patents are supposed to encourage innovation, so option A might be the correct answer.
ET
Ettie
1 year ago
So, the answer would be market concentration, right?
GA
Gabriele
1 year ago
Yes, that's correct. It's to promote innovation and new product development.
VI
Viva
1 year ago
I think patents are granted to encourage firms to invest in research and development.
MA
Madalyn
1 year ago
Option B seems like the right answer here. Patents definitely create barriers to entry for new firms.
DO
Dorothy
1 year ago
That's true, patents give the firm exclusive rights to their product.
NA
Nan
1 year ago
I agree, patents make it harder for new firms to enter the market.
BA
Barney
2 years ago
But doesn't granting patents also lead to market concentration as only the patent holder can produce the product?
PA
Patrick
2 years ago
I agree with Vallie, patents encourage firms to invest in R&D by providing them with exclusive rights.
VA
Vallie
2 years ago
I think patents are an example of entry barriers.