Diminishing Marginal Returns Implies

question 153

Multiple Choice

Diminishing marginal returns implies

• A) decreasing average variable costs.
• B) decreasing marginal costs.
• C) increasing marginal costs.
• D) decreasing average fixed costs.

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Definitions:

Zero-Coupon Bonds

Bonds that are sold at a discount and pay no regular interest payments but are redeemed at their face value at maturity.

Yield To Maturity

The total return expected on a bond if held until its maturity date, accounting for its current price, interest payments, and face value.

Maturity

The date on which a financial instrument (e.g., bond, loan) reaches its final installment, and the principal is due to be paid to investors.

Expectations Theory

A theory related to interest rates stating that the long-term interest rates are geometric averages of present and future short-term interest rates, reflecting market assumptions about future rates.