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CMFAS Module 4a
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Question 1 of 30
1. Question
In fourteen Insights, what is, in general, a bad idea because equity holders end up paying more taxes?
Correct
In Fourteen Insights, cash dividends are in general a bad idea because equity holders end up paying more taxes. A cash dividend is the distribution of funds or money paid to stockholders generally as part of the corporation’s current earnings or accumulated profits.
Incorrect
In Fourteen Insights, cash dividends are in general a bad idea because equity holders end up paying more taxes. A cash dividend is the distribution of funds or money paid to stockholders generally as part of the corporation’s current earnings or accumulated profits.
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Question 2 of 30
2. Question
In finance, what is double taxation?
I. Double taxation is a tax principle referring to income taxes paid twice on the same source of
II. Double taxation is a tax principle referring to income taxes paid twice on the different source of income
III. Double taxation is a term where sales tax is paid twice
IV. Double taxation can occur when income is taxed at both the corporate level and personal levelCorrect
Double taxation is a tax principle referring to income taxes paid twice on the same source of income. it occurs when income is taxed at both the corporate level and personal level. Double taxation also occurs in international trade or investment when the same income is taxed in two different countries.
Incorrect
Double taxation is a tax principle referring to income taxes paid twice on the same source of income. it occurs when income is taxed at both the corporate level and personal level. Double taxation also occurs in international trade or investment when the same income is taxed in two different countries.
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Question 3 of 30
3. Question
When does double taxation occur?
I. When income is taxed at the corporate level
II. When income is taxed at a high level.
III. When income is taxed at a low level.
IV. When income is taxed at a personal level.Correct
Double taxation can be defined as a tax principle in which income taxes paid twice on the same source of income. It occurs when income is taxed at both the corporate level and personal level. Double taxation also occurs in international trade or investment when the same income is taxed in two different countries.
Incorrect
Double taxation can be defined as a tax principle in which income taxes paid twice on the same source of income. It occurs when income is taxed at both the corporate level and personal level. Double taxation also occurs in international trade or investment when the same income is taxed in two different countries.
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Question 4 of 30
4. Question
When does double taxation occur in international trade or investment?
Correct
Double taxation is a tax principle referring to income taxes paid twice on the same source of income. it occurs when income is taxed at both the corporate level and personal level. Double taxation also occurs in international trade or investment when the same income is taxed in two different countries.
Incorrect
Double taxation is a tax principle referring to income taxes paid twice on the same source of income. it occurs when income is taxed at both the corporate level and personal level. Double taxation also occurs in international trade or investment when the same income is taxed in two different countries.
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Question 5 of 30
5. Question
In finance, what is capital gain?
Correct
Capital gain is a rise in the value of a capital asset in investment or real estate that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on income taxes.
Incorrect
Capital gain is a rise in the value of a capital asset in investment or real estate that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on income taxes.
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Question 6 of 30
6. Question
when does the capital gain claim?
Correct
Capital gain is a rise in the value of a capital asset in investment or real estate that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on income taxes.
Incorrect
Capital gain is a rise in the value of a capital asset in investment or real estate that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on income taxes.
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Question 7 of 30
7. Question
In finance, what is an ex-day drop or ex-dividend date?
I. The ex-dividend date or “ex-date” is the day the stock starts trading without the value of its next dividend payment
II. The ex-dividend date or “ex-date” is the day the stock starts trading with the value of its next dividend payment
III. The ex-dividend date for a stock is one business day after the record date
IV. The ex-dividend date for a stock is one business day before the record dateCorrect
Ex-dividend is a stock that is trading without the value of the next dividend payment. The ex-dividend date or “ex-date” is the day the stock starts trading without the value of its next dividend payment. The ex-dividend date for a stock is one business day before the record date means to say an investor who buys the stock on its ex-dividend date or later will not be eligible to receive the declared dividend.
Incorrect
Ex-dividend is a stock that is trading without the value of the next dividend payment. The ex-dividend date or “ex-date” is the day the stock starts trading without the value of its next dividend payment. The ex-dividend date for a stock is one business day before the record date means to say an investor who buys the stock on its ex-dividend date or later will not be eligible to receive the declared dividend.
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Question 8 of 30
8. Question
How can the excess of cash be get rid of?
I. Invest in assets and in your business
II. Savings accounts and term deposits
III. Get a loan from a finance company
IV. Save it at homeCorrect
There are five strategies for dealing with excess cash:-
(A) Invest in assets
(B) Sinking surplus cash into shares, stocks or property is a good way to grow the money
(C) Savings accounts and term deposits
(D) Pay down the debt or spend it
(E) Invest in businessIncorrect
There are five strategies for dealing with excess cash:-
(A) Invest in assets
(B) Sinking surplus cash into shares, stocks or property is a good way to grow the money
(C) Savings accounts and term deposits
(D) Pay down the debt or spend it
(E) Invest in business -
Question 9 of 30
9. Question
In capital structure, what is meant by bankruptcy costs?
I. The legal term used to describe the process needed to help repay assets and other obligations.
II. Bankruptcy usually happens when a company has far more debt than it does equity.
III The legal term used to describe the process needed to help repay debts and other obligations.
IV. Bankruptcy usually happens when a company has less debt than it does equity.Correct
When companies can’t pay their debts, they may have very limited options for their future. One of those options may be bankruptcy—the legal term used to describe the process needed to help repay debts and other obligations. It usually happens when a company has far more debt than it does equity.
Incorrect
When companies can’t pay their debts, they may have very limited options for their future. One of those options may be bankruptcy—the legal term used to describe the process needed to help repay debts and other obligations. It usually happens when a company has far more debt than it does equity.
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Question 10 of 30
10. Question
In capital structure, what is the formula for free cash flow?
Correct
Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. The formula for Free Cash Flow is following!
FCF=Operating Cash Flow – Capital ExpendituresIncorrect
Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. The formula for Free Cash Flow is following!
FCF=Operating Cash Flow – Capital Expenditures -
Question 11 of 30
11. Question
In capital structure, which of the following is cash that a company produces through its operations, less the cost of expenditures on assets?
Correct
Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. Free cash flow can be calculated in various ways and it depends on audience and available data.
Incorrect
Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. Free cash flow can be calculated in various ways and it depends on audience and available data.
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Question 12 of 30
12. Question
In capital structure, while calculating the free cash flow, on which thing this free cash flow depend?
I. Cash flow depends on the audience
II. Invested cash
III. Total income
IV. Cash flow depends on available dataCorrect
Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. Free cash flow can be calculated in various ways and it depends on the audience and available data.
Incorrect
Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. Free cash flow can be calculated in various ways and it depends on the audience and available data.
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Question 13 of 30
13. Question
In capital structure, if cash flow from operating activities $1.944 billion and capital expenditures are $760 million then what will be the free cash flow?
Correct
In capital structure, if cash flow from operating activities $1.944 billion and capital expenditures are $760 million then the free cash flow will be $1.184 Billion. Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. The formula for Free Cash Flow is following!
FCF=Operating Cash Flow – Capital ExpendituresIncorrect
In capital structure, if cash flow from operating activities $1.944 billion and capital expenditures are $760 million then the free cash flow will be $1.184 Billion. Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. The formula for Free Cash Flow is following!
FCF=Operating Cash Flow – Capital Expenditures -
Question 14 of 30
14. Question
In capital structure, if cash flow from operating activities $2.944 billion and capital expenditures are $960 million then what will be the free cash flow?
Correct
In capital structure, if cash flow from operating activities $2.944 billion and capital expenditures are $960 million then the free cash flow will be $1.984 Billion. Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. The formula for Free Cash Flow is following!
FCF=Operating Cash Flow – Capital ExpendituresIncorrect
In capital structure, if cash flow from operating activities $2.944 billion and capital expenditures are $960 million then the free cash flow will be $1.984 Billion. Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. The formula for Free Cash Flow is following!
FCF=Operating Cash Flow – Capital Expenditures -
Question 15 of 30
15. Question
In capital structure, if cash flow from operating activities $3.805 capital expenditures are $1503 million then what will be the free cash flow?
Correct
In capital structure, if cash flow from operating activities $3.805 capital expenditures are $1503 million then the Free Cash Flow will be $2.302 Billion. Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. The formula for Free Cash Flow is following!
FCF=Operating Cash Flow – Capital ExpendituresIncorrect
In capital structure, if cash flow from operating activities $3.805 capital expenditures are $1503 million then the Free Cash Flow will be $2.302 Billion. Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. The formula for Free Cash Flow is following!
FCF=Operating Cash Flow – Capital Expenditures -
Question 16 of 30
16. Question
In capital structure, if cash flow from operating activities $6.502 billion and capital expenditures are $1805 million then what will be the Free Cash Flow?
Correct
In capital structure, if cash flow from operating activities $6.502 billion and capital expenditures are $1805 million then the Free Cash Flow will be $4.697 Billion. Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. The formula for Free Cash Flow is following!
FCF=Operating Cash Flow – Capital ExpendituresIncorrect
In capital structure, if cash flow from operating activities $6.502 billion and capital expenditures are $1805 million then the Free Cash Flow will be $4.697 Billion. Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. The formula for Free Cash Flow is following!
FCF=Operating Cash Flow – Capital Expenditures -
Question 17 of 30
17. Question
In capital structure, what are agency costs?
I. An agency cost is an internal expense that comes from an agent taking action on behalf of a principal
II. Core inefficiencies, savings, and disruptions contribute to agency costs
III. An agency cost is an external expense that comes from an agent taking action on behalf of a principal
IV. Core inefficiencies, dissatisfactions, and disruptions contribute to agency costsCorrect
In Capital Structure ,An agency cost is an internal expense that comes from an agent taking action on behalf of a principal. Core inefficiencies, dissatisfactions, and disruptions also fall in agency costs.
Incorrect
In Capital Structure ,An agency cost is an internal expense that comes from an agent taking action on behalf of a principal. Core inefficiencies, dissatisfactions, and disruptions also fall in agency costs.
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Question 18 of 30
18. Question
In capital structure, what are the types of agency costs?
I. Monitoring costs
II. Residual losses
III. Bankruptcy costs
IV. Bonding costsCorrect
In Capital Structure, An agency cost is an internal expense that comes from an agent taking action on behalf of a principal. Core inefficiencies, dissatisfactions, and disruptions also fall in agency costs. There are three types of Agency Costs including Monitoring Costs, Residual Losses and Bonding Costs.
Incorrect
In Capital Structure, An agency cost is an internal expense that comes from an agent taking action on behalf of a principal. Core inefficiencies, dissatisfactions, and disruptions also fall in agency costs. There are three types of Agency Costs including Monitoring Costs, Residual Losses and Bonding Costs.
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Question 19 of 30
19. Question
Patel limited last paid dividend for 50,000 when it made a net profit for 150,000. This year also the company is looking to pay a dividend as they have done spectacular business and shareholders are pleased about it. The company has decided to increase its dividend by 2% than last year. The dividend formula =Total dividends / Net income than what is the dividend payout ratio for this year?
Correct
Patel limited last paid dividend for 150,000 when it made a net profit for 450,000. This year also the company is looking to pay a dividend as they have done spectacular business and shareholders are pleased about it. The company has decided to increase its dividend by 2% than last year.
Dividend Formula =Total Dividends / Net Income
= 150,000/ 450,000 *100
Dividend Payout will be 33.33%
Now the company proposes to pay an additional dividend of 2% from last year and hence this year dividend would be 33.33% + 2.00% which is 35.33%.Incorrect
Patel limited last paid dividend for 150,000 when it made a net profit for 450,000. This year also the company is looking to pay a dividend as they have done spectacular business and shareholders are pleased about it. The company has decided to increase its dividend by 2% than last year.
Dividend Formula =Total Dividends / Net Income
= 150,000/ 450,000 *100
Dividend Payout will be 33.33%
Now the company proposes to pay an additional dividend of 2% from last year and hence this year dividend would be 33.33% + 2.00% which is 35.33%. -
Question 20 of 30
20. Question
John limited last paid dividend for 45,000 when it made a net profit for 135,000. This year also the company is looking to pay a dividend as they have done spectacular business and shareholders are pleased about it. The company has decided to increase its dividend by 3% than last year. Dividend Formula =Total Dividends / Net income than what is the dividend payout ratio for this year?
Correct
limited last paid dividend for 45,000 when it made a net profit for 1350,00. This year also the company is looking to pay a dividend as they have done spectacular business and shareholders are pleased about it. The company has decided to increase its dividend by 2% than last year.
Dividend Formula =Total Dividends / Net Income
= 45,000/ 135,000 *100
Dividend Payout will be 33.33%
Now the company proposes to pay an additional dividend of 3% from last year and hence this year dividend would be 33.33% + 3.00% which is 36.33%.Incorrect
limited last paid dividend for 45,000 when it made a net profit for 1350,00. This year also the company is looking to pay a dividend as they have done spectacular business and shareholders are pleased about it. The company has decided to increase its dividend by 2% than last year.
Dividend Formula =Total Dividends / Net Income
= 45,000/ 135,000 *100
Dividend Payout will be 33.33%
Now the company proposes to pay an additional dividend of 3% from last year and hence this year dividend would be 33.33% + 3.00% which is 36.33%. -
Question 21 of 30
21. Question
In risk and incentive Management, what is meant by Hedging?
I. A hedge is an investment that protects your finances from a risky situation
II. Hedging is done to minimize or offset the chance that your assets will lose value
III. Hedging is done to maximize or offset the chance that your assets will lose value
IV. A hedge is an investment that protects your finances from every situationCorrect
In Risk and Incentive Management, A hedge is an investment that saves your finances from a risky situation. Hedging is done to minimize or offset the chance that your assets will lose value. It also limits your loss to a known amount if the asset does lose value. It’s similar to home insurance. You pay a fixed amount each month. If a fire destroys your home, your loss is the only the known amount of the deductible.
Incorrect
In Risk and Incentive Management, A hedge is an investment that saves your finances from a risky situation. Hedging is done to minimize or offset the chance that your assets will lose value. It also limits your loss to a known amount if the asset does lose value. It’s similar to home insurance. You pay a fixed amount each month. If a fire destroys your home, your loss is the only the known amount of the deductible.
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Question 22 of 30
22. Question
In risk and incentive management, what is the thing that protects your finances from a risky situation?
Correct
In risk and incentive management, a hedge is an investment that saves your finances from a risky situation. Hedging is done to minimize or offset the chance that your assets will lose value. It also limits your loss to a known amount if the asset does lose value. It’s similar to home insurance. You pay a fixed amount each month. If a fire destroys your home, your loss is the only the known amount of the deductible.
Incorrect
In risk and incentive management, a hedge is an investment that saves your finances from a risky situation. Hedging is done to minimize or offset the chance that your assets will lose value. It also limits your loss to a known amount if the asset does lose value. It’s similar to home insurance. You pay a fixed amount each month. If a fire destroys your home, your loss is the only the known amount of the deductible.
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Question 23 of 30
23. Question
In capital budgeting, what is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time?
Correct
In capital budgeting, inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. It is the rise in the general level of prices where a unit of currency effectively buys less than it did in prior periods. Often expressed as a percentage, inflation thus indicates a decrease in the purchasing power of a nation’s currency.
Incorrect
In capital budgeting, inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. It is the rise in the general level of prices where a unit of currency effectively buys less than it did in prior periods. Often expressed as a percentage, inflation thus indicates a decrease in the purchasing power of a nation’s currency.
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Question 24 of 30
24. Question
In capital budgeting, when inflation can be contrasted with deflation?
I. When prices instead of decline
II. When prices instead of increase
III. When no effect on prices
IV. When prices instead of declineCorrect
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. It is the rise in the general level of prices where a unit of currency effectively buys less than it did in prior periods. Often expressed as a percentage, inflation thus indicates a decrease in the purchasing power of a nation’s currency. Inflation can be contrasted with deflation, which occurs when prices instead of decline.
Incorrect
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. It is the rise in the general level of prices where a unit of currency effectively buys less than it did in prior periods. Often expressed as a percentage, inflation thus indicates a decrease in the purchasing power of a nation’s currency. Inflation can be contrasted with deflation, which occurs when prices instead of decline.
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Question 25 of 30
25. Question
In capital budgeting, which type of Inflation indexes are most commonly used?
I. Consumer price index (CPI)
II. Patrial price index (PPI)
III. Wholesale price index (WPI)
IV. Fence price index (FPI)Correct
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. It is the rise in the general level of prices where a unit of currency effectively buys less than it did in prior periods. Often expressed as a percentage, inflation thus indicates a decrease in the purchasing power of a nation’s currency. Most commonly used inflation indexes are the Consumer Price Index (CPI) and the Wholesale Price Index (WPI).
Incorrect
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. It is the rise in the general level of prices where a unit of currency effectively buys less than it did in prior periods. Often expressed as a percentage, inflation thus indicates a decrease in the purchasing power of a nation’s currency. Most commonly used inflation indexes are the Consumer Price Index (CPI) and the Wholesale Price Index (WPI).
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Question 26 of 30
26. Question
In capital budgeting, which type of inflation is the upward pressure on prices that follows a shortage in supply and economists describe it as “too many dollars chasing too few goods”?
Correct
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. Inflation has three types: Demand-Pull inflation, Cost-Push inflation, and Built-In inflation. Demand-pull inflation is the upward pressure on prices that follows a shortage in supply. Economists describe it as “too many dollars chasing too few goods.
Incorrect
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. Inflation has three types: Demand-Pull inflation, Cost-Push inflation, and Built-In inflation. Demand-pull inflation is the upward pressure on prices that follows a shortage in supply. Economists describe it as “too many dollars chasing too few goods.
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Question 27 of 30
27. Question
In capital budgeting, which type of inflation occurs when overall prices increase (inflation) due to increases in the cost of wages and raw materials.?
Correct
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. Inflation has three types:
(A) Demand-Pull inflation
(B) Cost-Push inflation
(C) Built-In inflation
Cost-push inflation occurs when overall prices increase (inflation) due to increases in the cost of wages and raw materials.Incorrect
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. Inflation has three types:
(A) Demand-Pull inflation
(B) Cost-Push inflation
(C) Built-In inflation
Cost-push inflation occurs when overall prices increase (inflation) due to increases in the cost of wages and raw materials. -
Question 28 of 30
28. Question
In capital budgeting, which type of inflation results from past events and persists in the present?
Correct
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. Inflation has three types: Demand-Pull inflation, Cost-Push inflation, and Built-In inflation. Built-in inflation is a type of inflation that results from past events and persists in the present.
Incorrect
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. Inflation has three types: Demand-Pull inflation, Cost-Push inflation, and Built-In inflation. Built-in inflation is a type of inflation that results from past events and persists in the present.
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Question 29 of 30
29. Question
In capital budgeting, which of the following are the types of inflation?
I. Demand-Pull inflation
II. Cost-Push inflation
III. Built-in inflation
IV Hyper inflationCorrect
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. Inflation has three types:-
(A) Demand-Pull inflation
(B) Cost-Push inflation
(C) Built-In inflationIncorrect
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. Inflation has three types:-
(A) Demand-Pull inflation
(B) Cost-Push inflation
(C) Built-In inflation -
Question 30 of 30
30. Question
In capital budgeting, which of the statement is correct for Demand-Pull inflation?
Correct
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. Inflation has three types: Demand-Pull inflation, Cost-Push inflation, and Built-In inflation. Demand-pull inflation is the upward pressure on prices that follows a shortage in supply. Economists describe it as “too many dollars chasing too few goods.
Incorrect
Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time. Inflation has three types: Demand-Pull inflation, Cost-Push inflation, and Built-In inflation. Demand-pull inflation is the upward pressure on prices that follows a shortage in supply. Economists describe it as “too many dollars chasing too few goods.