If the interest rate is 5%, what is the present value of a security that pays you $1, 050 next year and $1,102.50 two years from now? If this security sold for $2200, is the yield to maturity greater or less than 5%? Why?
What will be an ideal response?
PV = $1,050/(1. +.05 ) + $1,102.50/(1 + 0.5 )2
PV = $2,000
If this security sold for $2200, the yield to maturity is less than 5%. The lower the interest rate the higher the present value.
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The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What is Evan's shut-down price?
A) $6 per sandwich B) $4 per sandwich C) $3 per sandwich D) $5 per sandwich
A tariff on a good _________ its price.
Fill in the blank(s) with the appropriate word(s).
Assume that consumption in the United States is $9,000 billion in 2009. If the MPC is 0.8 and disposable income increases by $1,000 billion in 2010, then the level of consumption in 2010 will be
A. $10,000 billion. B. $9,800 billion. C. $9,000 billion. D. $7,200 billion.
Refer to Table 2.3, which shows the production possibilities frontier between the production of capital goods and consumer goods in an economy. What is the opportunity cost of producing 3 units of capital goods at point D?
Table 2.3 Products A Capital goods 0 Consumer 40 goods B C D E 1 2 3 4 35 20 7 0 a. 35 units of capital goods. b. 13 units of consumer goods. c. 7 units of consumer goods. d. 15 units of consumer goods. e. 5 units of consumer goods.