For each of the following statements, state whether it is true or false. If false, how could the statement be modified to render it true? (a) Preferred stock is riskier than corporate bonds, due to the fact that owners of preferred stock can force the firm into bankruptcy if the firm fails to make promised dividend payments. (b) A speculator who buys a derivatives contract for an agri- cultural product, such as coffee, is a risk-taker, while the issuer of the contract, who owns the agricultural product (coffee) wishes to avoid risk. (c) Fixed income securities may be valuable to retirees who are looking for a predictable source of income, but they tend to carry both a lower rate of return and greater risk than corporate stock.

In march 2012, the state of california started requiring that all packaging for food and drink with the additive 4-methylimidazole (4-mi) be clearly labeled with a cancer warning. because of this, both pepsi and coke changed their formula to eliminate 4-mi as an ingredient. if pepsi and coke did not change their formula, holding all else constant, what would have happened to the demand for these goods, assuming pepsi and coke were in a competitive market? a. the demand curve for both pepsi and coke would have shifted to the right, causing the price of both products to decrease and the profits for the companies to fall. b. the demand curve for pepsi and coke would have remained unchanged, but the price of both products would have decreased and the profits for the companies would have fallen. c. the demand curve for pepsi and coke would have decreased, but the prices and profits would not have changed. d. the demand curve for only one of them would change because pepsi and coke are substitutes. e. the demand curve for pepsi and coke would have shifted to the left, causing the price of both products to decrease and the profits for both companies to fall.