The First Unit of a Product Took 900 Hours to Build

question 29

Multiple Choice

The first unit of a product took 900 hours to build and the learning curve is 90%. How long will it take to make the first 3 units? (Use Table E.3 in the text.)

• A) less than or equal to 2,470 hours
• B) from 2,470 to 2,472 hours
• C) from 2,472 to 2,475 hours
• D) from 2,475 to 2,478 hours
• E) from 2,478 to 2,481 hours

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Definitions:

STRIPPED Cash Flows

Cash flows from financial instruments that have been separated from their financial structure, often used in securitization.

Arbitrage

The practice of taking advantage of a price difference between two or more markets, striking a combination of matching deals that capitalize upon the imbalance.

Forward Rates

Interest rates or currency exchange rates fixed now for transactions that will occur at a future date.

Future Short Rates

Predicted interest rates for short-term debt securities in the future, based on current market conditions and monetary policy expectations.