Interest-rate risk is the riskiness of an asset's returns due to
A) interest-rate changes.
B) changes in the coupon rate.
C) default of the borrower.
D) changes in the asset's maturity.
A
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In order to get children to eat all the food they've served, regardless of their hunger, mothers have relied for decades on the argument that "there are starving children in Africa." Assuming the presence of hungry children on another continent does not affect the utility you derive from the food on your plate, if you choose to force down food based on this argument, you are:
A. acting rationally. B. caring more about starving children than your own well-being. C. acting irrationally. D. doing your part in the fight against world hunger.
Sonia works at a restaurant where tips are pooled and divided equally. Anna works at a different restaurant where she keeps the tips her customers leave for her. Which of the following is true?
a. Both work equally hard because their hourly wage from the employer is low, and they can make up for this with tips. b. Sonia works harder, because she receives the same amount of tips as other workers. c. Anna works harder, because she works at an expensive restaurant. d. Anna works harder, because her tips are her private property. e. Neither of them has an incentive to work hard because tips are a small part of their earnings.
Under perfect competition, the market mechanism, without any government regulation, is capable of
a. allocating resources efficiently. b. solving equity problems. c. making the average cost of labor equal to the average cost of all commodities. d. making more income available to the poor.
The fact that we observe a trade-off between risk and return is puzzling to economists, because that observation conflicts with the notion that most people are risk averse
a. True b. False Indicate whether the statement is true or false