Use the Table Below to Answer the Following Questions

question 10

Multiple Choice

Use the table below to answer the following questions.
Table 10.2.1

-Refer to Table 10.2.1. If the price of labour is $10 per unit and the price of capital is $20 per unit, which method is economically efficient?

• A)1 only
• B)2 only
• C)3 only
• D)all of the above
• E)1 and 3 only

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Definitions:

Yield To Maturity

A measurement of the annual return an investor can expect from a bond if held to its end date, factoring in its price, interest payments, and time to maturity.

Zero-Coupon Bond

A bond that does not pay periodic interest payments but is sold at a deep discount from its face value and pays its full face value at maturity.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, often used as an indication of interest rate risk.

Coupon Bond

A type of bond that pays the holder a fixed interest rate (the coupon) at regular intervals until the bond matures, when the principal amount is repaid.