A One-Year STRIPS Sells at an Interest Rate of 3

question 86

Multiple Choice

A one-year STRIPS sells at an interest rate of 3.15% and a two-year STRIPS sells at an interest rate of 3.88%. What is the implied one-year forward rate? Assume the rates are effective annual rates.

• A)4.44%
• B)4.50%
• C)4.54%
• D)4.57%
• E)4.62%

Calculate and interpret the ratio of price elasticities of demand in different markets under price discrimination.

Determine the conditions under which profits are maximized through price discrimination.

Understand the role of marginal cost in the pricing and output decisions of firms practicing price discrimination.

Calculate optimal pricing for discriminating monopolists in theoretical and practical scenarios.

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Definitions:

Authorization

The official permission or power to do something, often through a formal process or document.

Global Corporations

Large business entities that operate in multiple countries around the world, transcending national borders.

Direct Foreign Investment

An investment by an individual or company in one country in business interests located in another country, often by buying shares or establishing operations.

Internationalization

Refers to the process of designing products, services, and strategies in a way that they can be easily adapted to suit different countries and cultures.