Apples Tacos -Sally Derives Utility from Consuming Apples and Tacos as Shown

question 235

Multiple Choice

Apples Tacos

-Sally derives utility from consuming apples and tacos as shown in the table above. Apples cost $1 each and tacos cost $2 each. If Sally's income is $9, she will consume

• A) 5 apples and 2 tacos.
• B) 3 apples and 3 tacos.
• C) 1 apple and 4 tacos.
• D) no apples and 4 1/2 tacos.

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Definitions:

Value Weighted Average

A method of calculating an average where each data point is weighted according to its value, commonly used in financial indexes to represent market trends.

Duration

An indication of how sensitive the price of a bond or similar debt security is to shifts in interest rates, often measured in years.

Substitution Swap

A Substitution Swap is a strategy in fixed-income markets where an investor exchanges one bond for another with similar features but more attractive terms.

Interest Rate Risk

The risk of losing value in an investment due to a change in interest rates, affecting both bonds and loans.