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 .
Economics
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A mandatory seatbelt law ends up raising the number of traffic fatalities if it lowers fatalities per accident from 0.12 to 0.08 while raising the number of accidents per period from 400,000 to any more than
A) 480,000. B) 600,000. C) 660,000. D) 770,000.
Economics
The combinations of goods X and Y that are affordable to the consumer are defined by the:
A. budget set. B. income line. C. consumption set. D. budget constraint.
Economics