An Externality Is the Effect That Occurs When the Production

question 184

True/False

An externality is the effect that occurs when the production or consumption of a good directly affects a third party.

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Definitions:

Semi-annually

Occurring twice a year.

Effective Annual Yield

Annualized interest rate on a security computed using compound interest techniques.

Yield Curve

A graph that shows the relationship between the interest rates and the maturity dates of debt securities issued by the same issuer.

Liquidity Premiums

Additional yield that investors require to hold securities with lower liquidity, compensating them for the higher cost and difficulty of trading such securities.