In the Classroom Experiment Where a Mug Is Bought and Sold

question 13

Multiple Choice

In the classroom experiment where a mug is bought and sold,

• A) acquiring the mug was perceived to be a greater "gain" for those who acquired it than the "loss" for those who gave it up.
• B) giving up the mug was perceived to be a greater "loss" to those who had one than the "gain" from obtaining a mug for those without one.
• C) the price at which the mug was exchanged compensated precisely the value gained and lost by the traders.
• D) the price at which the mug could be sold was always less than the price at which the mug was acquired.

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Definitions:

Interest Rate

An interest rate is the percentage at which interest is paid by borrowers for the use of money that they borrow from a lender.

Strip Bond

A debt security that is derived from the coupon and principal payments of a bond, which are separated ("stripped") and sold as individual zero-coupon bonds.

Compounded Semi-Annually

Interest calculated on the principal and previously earned interest twice a year.

Quarterly Compounded

An interest calculation method where interest is added to the principal every quarter, increasing the amount of interest earned or paid.