Which of the Following Is True for a Price Ceiling

question 35

Multiple Choice

Which of the following is true for a price ceiling?

• A) A price ceiling is a limit below which it is illegal to set a price.
• B) A price ceiling usually leads to a shortage in a market.
• C) A price ceiling is usually set above the equilibrium price.
• D) A price ceiling is usually set for goods like alcohol to curb excess consumption.

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Definitions:

Modified Duration

A measure of the sensitivity of the price of a bond or a bond portfolio to a change in interest rates, adjusted for the possibility that the bond may be called before maturity.

Basis Point

A basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, equivalent to 0.01%.

Interest Rates

The fee, shown as a percentage of the principal amount, that a lender imposes on a borrower for the use of assets.

T-bill Rate

The yield on U.S. Treasury bills, a benchmark for short-term interest rates in the United States.