What Is the Best Example of a Marginal Change

question 156

Multiple Choice

What is the best example of a marginal change?

• A) After graduating from university, Neville's income increases from $1000 per month to $1,100 per month.
• B) Jadelyn completes the six-month probationary period at her job and is now paid $11.2 |5 per hour instead of $11.00.
• C) Housing prices in an area increase by 50% when a new freeway is built in a small town.
• D) A hard freeze wipes out half of the potato crop in Prince Edward Island and the price of potatoes doubles.

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Definitions:

Debt Ratings

Assessments provided by rating agencies that evaluate the creditworthiness of debt issuers and their financial instruments.

Default Risk

Default risk is the chance that a borrower will be unable to make the required payments on their debt obligations.

Interest Rate Risk

The risk of loss to an investor from changes in the price of a bond that arise from changes in the market interest rate. Also called price risk and maturity risk.

Maturity Risk

Maturity risk pertains to the uncertainty and potential loss associated with holding a bond or other fixed-income investment until its maturity date.