If a financial institution has 50% of its portfolio in a bond with a five-year duration and 50% of its portfolio in a bond with a seven-year duration, what is the duration of the portfolio?
A) 12 years
B) 7 years
C) 6 years
D) 5 years
C
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Steven lives in a big city where there is a shortage of parking. He has a parking spot in his driveway where he parks his car. Which of the following statements is most correct?
A) The opportunity cost of using the spot is zero, because Steven owns the house. B) Steven has a lower opportunity cost of owning a car than his neighbor, who must rent a parking spot. C) The opportunity cost of using the parking spot is the price he could charge someone else for using the spot. D) The opportunity cost depends on how much Steven's mortgage payment is.
In insurance markets, moral hazard occurs when the behavior of
A) the insured person changes in a way that raises costs for the insurer, since the insured person no longer bears the full costs of that behavior. B) the insurer changes in a way that raises costs for the insured person, since the insurer no longer bears the full costs of that behavior. C) the insured person changes in a way that eliminates rising health care costs for the insurer, since the insured person no longer bears the full costs of that behavior. D) the insured person has an incentive to under consume medical services, simply because the insured person no longer bears the full cost of medical services.
Which actor in the simplified circular flow model is on the supply side of the goods market?
A. Firms B. Households C. Markets for factors of production D. Government
Accountants often ignore implicit costs
a. True b. False Indicate whether the statement is true or false