What is the most an individual would be willing to pay on January 1st for a bond that promises to pay $500 at the end of the year for the next three years if the market rate of interest is 5 percent? Explain
What will be an ideal response?
The individual would be willing to pay no more than the present value of the income stream which is ($500/1.05) + ($500/ 1.1025) + ($500/1.157625) = $476.19 + $453.51 + $431.92 = $1,361.62 .
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On Green Island, the demand for pencils is perfectly elastic and the supply of pencils is perfectly inelastic. If a sales tax on pencils is introduced
A) the tax is split evenly between the buyers and sellers. B) the buyers pay the entire tax. C) no one pays the tax. D) the sellers pay the entire tax.
Refer to Figure 15-7. Suppose the economy is in short-run equilibrium above potential GDP, the unemployment rate is very low, and wages and prices are rising
Using the static AD-AS model in the figure above, the correct Fed policy for this situation would be depicted as a movement from A) A to E. B) B to C. C) C to D. D) C to B. E) A to B.
Which of the following is true of the production function? a. The production function of a normal good has a constant slope. b. The production function of a luxury good is a horizontal line. c. Generally, a production function has a negative slope
d. Generally, a production function has a variable slope.
Which of the following is NOT a barrier to entry that would allow a monopolist to keep potential competitors out of its market?
A. The firm has government authorization to be a monopoly. B. The market price of the product is too high. C. The firm has a patent on the good or control over some resource required for the production of the good. D. Significant economies of scale exist.