Suppose the nominal yield on interest rates during the next two years was expected to remain at 10%, but the yield on a one-year security was 10% and on two-year securities was 8%. Investors would:
a. Borrow for one year, invest for two years, and, at the end of the first year, roll over the loan.
b. Probably do nothing, because markets are efficient, which means there is no way to arbitrage the markets.
c. Borrow for two years, invest for one year, and then roll over the investment at the end of the first year.
d. Borrow for two years and invest for two years, but at the end of the first year, re-borrow and re-invest at the market rate.
e. Borrow for one year and invest for one year, but at the end of the first year, re-borrow and re-invest the borrowed funds at the expected rate.
.C
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Based on the table below and the principle of diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than ________ packages.Number of (Identical) MachinesTotal Packages Wrapped 1110,000213,000315,000
A. 15,000 B. 17,000 C. 16,000 D. 2,000
When one firm uses the same strategy as the other firm used in the previous time period, this is known as a:
A. tit-for-tat strategy. B. grim-trigger strategy. C. dominant strategy. D. predatory strategy.