Augi Buys a Bond for $10,000 and Receives Interest Payments

question 82

Multiple Choice

Augi buys a bond for $10,000 and receives interest payments of $400 every six months. The interest rate on the bond is approximately

• A) 4 percent.
• B) 8 percent.
• C) 12.5 percent.
• D) 25 percent.

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Definitions:

Marginal Cost

The cost incurred by producing one additional unit of a product or service.

Output

The total amount of goods or services produced by an individual, company, or economy during a specific period.

Negative Marginal Returns

Occurs when adding an additional factor of production actually decreases the total output, which can happen when there is too much input for the available resources or technology.

Input

Resources used in the production process to create goods or services, including labor, raw materials, and capital.