Tom buys a futures contract for U.S. Treasury bonds and on the settlement date the interest rate on U.S. Treasury bonds is higher than Tom expected. Tom will have:
A. gained money on his long position.
B. gained money on his short position.
C. lost money on his short position.
D. lost money on his long position.
Answer: D
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Suppose that medical researchers discover a new drug which slows the aging process, allowing the average life span in the United States to increase to 95 years of age. The permanent-income hypothesis suggests that
A) consumption spending would increase since lifetime income increases. B) consumption spending would increase since estimates of permanent income would increase. C) consumption spending would decrease since savings would rise to provide income for the longer retirement periods. D) None of the above is correct since predicted future annual incomes may not change.
What is the net present value of the investment?
a. $115.85 b. $1055.59 c. $1076.56 d. $346.78
The airline industry is best classified? as:
A) an oligopoly.
B) a monopoly.
C) perfectly competitive.
D) monopolistically competitive
An improvement in product quality leads to an increase in a firm's value by:
A. reducing labor cost. B. reducing inspection cost. C. reducing the cost of raw materials. D. reducing the opportunity cost of production.