Suppose you invest $5,000 in a one-year Japanese bond that pays 1% interest. At the time of your purchase, 85 yen equals $1 while one year later, 80 yen equals $1. What will be the value of your investment in one year when measured in dollars?
What will be an ideal response?
A $5,000 investment equals 425,000 yen. After earning 1% interest, you have 429,250 yen. When converted back to dollars, you have $5,369.
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The U.S. private sector holds about ________ percent of outstanding U.S. Treasury bonds.
A. 22 B. 30 C. 50 D. 17
The price of input goods changes due to _____________ or _______________ for that particular good.
Fill in the blank(s) with the appropriate word(s).
Assume that the current interest rate is 6%. You invest $10,000 of your own money in a restaurant that you own and operate. The normal return on this investment is
A. $0, as you used your own money. B. $600, as that is the interest forgone by not lending the money to someone else at a 6% interest rate. C. $10,000, as that is the amount invested in the restaurant. D. $10,600, the amount invested plus the interest charge on the investment.
According to Nobel laureate economist Ronald Coase, if a person lives near a neighborhood park and a storm uproots several trees around the neighborhood, people will naturally
A. pay for someone to work on their own private property and pitch in to help on the park. B. ignore the entire problem. C. work on the public park first. D. work to repair their own private damage first.