A Fixed-Income Security Pays

question 42

Multiple Choice

A fixed-income security pays

• A)a fixed level of income for the life of the owner.
• B)a fixed stream of income or a stream of income that is determined according to a specified formula for the life of the security.
• C)a variable level of income for owners on a fixed income.
• D)a fixed or variable income stream at the option of the owner.

---

Definitions:

Competitive Equilibrium Price

The market price where the quantity of goods supplied is equal to the quantity of goods demanded, effectively clearing the market.

Utility Function

A mathematical representation of how different quantities of goods or services are ranked according to their desirability for a consumer.

Initial Endowment

The initial distribution of income, wealth, or resources that individuals or organizations possess before entering into any market transactions.

Numeraire

A unit of account in which prices are expressed in an economic model, facilitating comparison and calculation.