If a security pays $110 next year and $121 the year after that, what is its yield to maturity if it sells for $200?
A) 9 percent
B) 10 percent
C) 11 percent
D) 12 percent
B
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The yield on a bond is that interest rate for which the present value of the interest and principal payments promised by the bond are
a. equal. b. as large as possible. c. equal to the price of the bond. d. equal to the face value of the bond.
The difference between fiscal policy and monetary policy is that
a. fiscal policy is macroeconomic policy and monetary policy is microeconomic policy b. monetary policy is macroeconomic policy and fiscal policy is microeconomic policy c. fiscal policy involves regulation of natural monopolies and monetary policy involves the provision of public goods d. monetary policy involves regulation of the money supply and fiscal policy involves government spending and taxing e. fiscal policy involves the promotion of competition and monetary policy involves collecting money to pay for taxes
A perfectly competitive firm cannot make economic profits in the long run because: a. it is a price taker
b. there are no barriers to entry into the industry. c. it faces a perfectly elastic demand curve. d. its advertising costs will rise to eliminate any economic profits.
The present discounted value of a future payment will increase when the
A. Risk of nonpayment increases. B. Future payment is moved further into the future. C. Opportunity cost of money increases. D. Interest rate decreases.