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Portfolio A consists of a one-year zero-coupon bond with a face value of $2,000 and a 10-year zero-coupon bond with a face value of $6,000. Portfolio B consists of a 5.95-year zero-coupon bond with a face value of $5,000. The current yield on all bonds is 10% per annum.
(a) Show that both portfolios have the same duration.
(b) Show that the percentage changes in the values of the two portfolios for a 0.1% per annum increase in yields are the same.
(c) What are the percentage changes in the values of the two portfolios for a 5% per annum increase in yields?
Explain.
Consider now an economy where you need to search for a job. Let b be the fraction of people that do not have a job and are searching for one. Write the equations describing the dynamics of those employed (E) and those who are not employed (NE). Compu..
In economics, what is meant by an Oligopoly? What are some ways to make a distinction between an Oligopolistic Market and a Market identified as having Monopolistic Competition?
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Suppose you consume nothing but goods X and Y. We have two years.
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A farmer has 120 acres on which to plan wheat or corn. Each acre of wheat requires $20 capital and 2 hours of labor. Each acre of corn requires $35 capital and 6 hours of labor. Labor costs are $8 per hour. The farmer has $2000 available for capital ..
Which of the following statements about B2B market segmentation is MOST true?
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