If the yield curve is flat for short maturities and then slopes downward for longer maturities, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predicting
A) a rise in short-term interest rates in the near future and a decline further out in the future.
B) constant short-term interest rates in the near future and a decline further out in the future.
C) a decline in short-term interest rates in the near future and a rise further out in the future.
D) a decline in short-term interest rates in the near future and an even steeper decline further out in the future.
D
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Refer to the scenario above. What is the value of having the extended warranty during the third year of ownership?
A) $15.03 B) $24.88 C) $44.66 D) $50.40
It has been argued that in the long run monopolistic competition is inefficient because
A) there are too many firms, each with excess capacity, producing too little output. B) there are few many firms, each with excess capacity, producing too much output. C) minimum average total costs are achieved but price exceeds marginal cost. D) minimum average total costs are not achieved and marginal cost exceeds price.
What does specialization in a nation lead to?
(A) International trade (B) Comparative advantage (C) Self-sufficiency (D) Absolute advantage
Suppose that your college offers you two payment plans. You may either pay tuition of $10,000 per year at the beginning of each of the next four years, or pay just $38,000 before the start of freshman year. If the interest rate is 10%, what would you do? If the interest rate were 2%, what would you do? Intuitively explain the difference in your answer
What will be an ideal response?