What is an advantage of using forward contracts instead of options to hedge against exchange-rate risk?
What will be an ideal response?
Option prices are higher than the fees associated with forward contracts.
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In the above table, between what two levels of output does one first observe the law of diminishing returns?
A) 0 and 1000 B) 1000 and 3000 C) 3000 and 4000 D) 4000 and 4500
"Higher prices always yield higher revenues." Do you agree or disagree? Why?
What will be an ideal response?
A regulated natural monopoly that must set price equal to average cost will
a. suffer an economic loss b. earn a net economic profit c. earn a normal profit d. earn so little that it will close in the long run e. earn no profits of any kind
Currency speculators are traders who seek to profit from a(n):
a. shift in global demand and supply patterns. b. increase in the price of oil. c. sudden shift in interest rates. d. exchange rate change by selling the currency expected to appreciate and buying the currency expected to depreciate. e. exchange rate change by selling the currency expected to depreciate and buying the currency expected to appreciate.