A 30-year Treasury bond as a face value of $1,000, price of $1,200 with a $50 coupon payment. Assume the price of this bond decreases to $1,100 over the next year. The one-year holding period return is equal to:
A. -3.79%.
B. -4.17%.
C. -9.17%.
D. -8.33%.
Answer: B
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Suppose Coke and Pepsi are perfect substitutes. a. Derive the shape of the (uncompensated) demand curve. b. Derive the shape of the compensated demand (or MWTP) curve.
What will be an ideal response?
Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall. Holding everything else constant, how would this affect the market for wheat (a substitute for corn)?
A) The demand for wheat would decrease and the equilibrium price of wheat would decrease. B) The supply of wheat would increase and the equilibrium price of wheat would decrease. C) The demand for wheat would increase because consumers could afford to buy more wheat and corn. D) The demand for wheat would decrease and the equilibrium price of wheat would increase.
To the stockholder, corporate stock represents
A) a source of fixed interest income. B) a loan. C) ownership. D) a guaranteed return of principal.
A key characteristic of the production function in the endogenous growth model presented in the text is that
A) there are increasing returns to scale in human capital. B) there are decreasing returns to scale in human capital. C) there are constant returns to scale in human capital. D) at low levels of human capital, there are increasing returns to scale in human capital, while at high levels of human capital, there are decreasing returns to scale in human capital.