A Shadow Price Indicates How Much a One-Unit Decrease/increase in the Right-Hand-Side

question 6

True/False

A shadow price indicates how much a one-unit decrease/increase in the right-hand-side value of a constraint will decrease/increase the optimal value of the objective function.

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Definitions:

Borrowers

Individuals or entities that receive funds from a lender under the condition of returning it over time, typically with interest.

Effective Rate of Interest

The real rate of interest earned or paid over a period, considering compounding.

Compounded Options

Compounded options are not a standard financial term, suggesting a mix-up or confusion with terms related to compound interest or options trading. NO.

GICs

In Canada, Guaranteed Investment Certificates represent an investment option guaranteeing a fixed return rate over a certain time frame.