Suppose Ahmoud Would Spend $1200 Per Year on Travel,even If

question 18

Multiple Choice

Suppose Ahmoud would spend $1200 per year on travel,even if his annual income were zero.As his income rises,he would spend 20% of each additional dollar of income on travel.Choose the correct mathematical equation that describes the functional relation between his travel spending (T) and his income (Y) .

• A)T = 0.2 + 1200Y
• B)Y = 1200 + 0.2T
• C)T = 1200 + 0.2Y
• D)Y = 1200 - 0.2T
• E)T = 1200 + 0.8Y

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Definitions:

Yield to Maturity

The total return anticipated on a bond if held until it matures, including all coupon payments and the return of the principal amount.

Coupon Rate

The interest rate stated on a bond when issued, which represents the amount of interest the bondholder receives, typically paid annually or semi-annually.

Coupon Rate

The annual percentage yield of a bond in relation to its face amount.

Yield to Maturity

The expected total yield on a bond when held until it reaches its date of maturity.