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Scenario 6-2
Suppose demand for a product is given by the equation
QD = 120 - 4P
and supply for the product is given by the equation
QS = 4P
-Refer to Scenario 6-2. Suppose the government sets a price ceiling at $17 for this product. Is this price ceiling binding, and what will be the size of the shortage/surplus in this market?
Zero-coupon Bond
A bond that does not pay interest during its life but is sold at a deep discount from its face value and pays its face value at maturity.
Yield To Maturity
The total return anticipated on a bond if it is held until it matures, including all interest payments and capital gains or losses.
Par Value
The face value of a bond or stock, representing the amount that the issuer agrees to pay at maturity or the value assigned to a stock for accounting purposes, respectively.
Matures
Refers to the final payment date of a loan or other financial instrument, at which point the principal (and all remaining interest) is due to be paid.
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