Assume the current one-year interest rate on a bond is 2%, and the one-year expected rate a year from now is 3%. According to the expectations theory of the term structure of interest rates, the two-year interest rate is
A. 2%.
B. 2.5%.
C. 3%.
D. 5%.
Answer: B
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Refer to the payoff matrix below. Which of the following is true for Bright Lights?
A) They do not have a dominant strategy.
B) Their pure strategy is to set a Low Price.
C) Their pure strategy is to set a High Price.
D) They do not have a pure strategy.
A bank's assets consist of $1,000,000 in total reserves, $2,100,000 in loans, and a building worth $1,200,000 . Its liabilities and capital consist of $3,000,000 in demand deposits and $1,300,000 in capital. If the bank is required to keep reserves equal to one-third of deposits, what is the level of the bank's excess reserves? How much could it loan out as a result?
a. zero; zero b. $300,000; $300,000 c. $300,000; $900,000 d. $700,000; $2,100,000
If two groups disagree about a policy, a smaller group that experiences higher benefits per person can be:
A. as successful as a larger group with smaller benefits per person, but typically not more. B. more difficult to bargain due to the small size of the group. C. the one more likely to get its way. D. the one less likely to get its way.
Sara left her last job, in which she was earning $60,000, in order to form her own consulting business. Her revenues for the first year of consulting were $210,000. During that year, she hired two assistants for $25,000 each and spent $25,000 on office equipment. In addition, she incurred $75,000 in miscellaneous expenses. Sara's accounting profit that first year was
A. $60,000. B. $50,000. C. $210,000. D. $0.