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a. Suppose a 10-year bond is to be issued at par, so its price is equal to its $100 face value. Suppose also that the prevailing rate of interest on the bond is 10 percent. How big would the bond's coupon have to be to induce people to hold it?
b. Now suppose that, just after this bond has been issued [its coupon is now fixed at the rate you found in part ( a )], interest rates on all 10-year bonds fall to 5 percent. What will happen to the bond's price? If you happened to be holding this bond, would this help you, hurt you, or not affect you at all?
Assuming that this 50 percent overtime-pay premium is newly required for all work beyond eight hours per day, draw a budget constraint that pictures a strategy of cutting hourly pay so that, at the original hours of work.
What quantity minimizes average total cost? What quantity maximizes profit? What price maximizes profit? What is the maximum profit? What is marginal cost when quantity = a, your answer in question 4? What is the socially efficient quantity?
The scores of students on the ACT college entrance examination in a recent year had a normal distribution with a mean of 18.6 and a standard deviation of 5.9. A simple random sample of 60 students who took the exam is selected for study
This was a period of rapid industrialization as well as migration into urban areas. What factors do you think might account for this fall in height and how would it affect your evaluation of economic welfare during the period?
U.S. Nominal GDP for the year 2010 was $14,658 billion, whereas in 2000 it was $9,951 billion. The GDP deflator for 2000 (2010) was 88 (111) using 2005 as a base year. Using the compound growth formula xt+n = xt(1 + g)^n
A well-known industrial firm has issued $1000 bonds that carry a 4% nominal annual interest, rate paid semiannually. The bonds mature 20 years from now, at which time the industrial firm will redeem them for $1000 plus the terminal semiannual inte..
Does the small R-squared in part (i) imply that spending is correlated with other factors affecting math10? Explain. Would you expect the R-squared to be much higher if expenditures were randomly assigned to schools-that is, independent of other s..
For each of the following cases, calculate the arc price elasticity of demand and state whether demand is elastic, inelastic, or unit elastic. When the price of milk increase from $2.25 to $250 per gallon
A firm believes the sales volume (S) of its product depends on its unit selling price and can be determined from the equation P=$100-S. The cost (C) of producing the product is given by equation C=$1000+10S.
annual savings due to an energy efficiency projects have a most likely value of $30,000. the high estimate of $40,000 has a probability of .2, and the low estimate of $20,000 has a probability of .3. what is the expected value for the annual savin..
If the CPI was 110 last year and is 121 this year, what is this year's rate of inflation In contrast, suppose that the CPI was 110 last year and is 108 this year. What is this year's rate of inflation What term do economists use to describe this..
A firm uses labor and capital as factors for a technology with constant returns to scale and strictly convex production function. A new manager, looking through past data, observed that: when factor prices were: wl = 20 and wk = 5; the firm hired l..
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