-Using the Above Figure, Suppose There Is a Decrease in the Number

question 407

Multiple Choice

-Using the above figure, suppose there is a decrease in the number of suppliers. Then

• A) the equilibrium price will decrease below $25 per dozen roses.
• B) we cannot predict what will happen to equilibrium quantity.
• C) the equilibrium quantity will decrease below 10 dozen roses.
• D) both the equilibrium price and quantity will increase.

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Definitions:

Duration

A measure of the sensitivity of a bond’s price to changes in interest rates, expressed as the weighted average time to receive the bond's cash flows.

Macaulay Duration

A measure of the weighted average time until a fixed income asset's cash flows are received, used to assess interest rate risk.

Yield

The earnings generated and realized on an investment over a particular period, expressed as a percentage of the investment’s cost, its current market value, or its face value.

Modified Duration

A measure of the sensitivity of a bond's price to changes in interest rates, adjusting for the bond's yield to maturity.