If Mr McLean Thinks the Last Dollar Spent on Bowling Yields

question 37

Multiple Choice

If Mr. McLean thinks the last dollar spent on bowling yields more satisfaction than the last dollar spent on hamburgers, and McLean is a utility-maximizing consumer, he should

• A) bowl less, so the marginal satisfaction from expenditures in this area will increase.
• B) spend more on hamburgers, so total satisfaction from that activity will increase.
• C) eliminate spending on hamburgers.
• D) bowl more and spend less on hamburgers.

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Definitions:

Coupon Rate

The interest rate that an issuer of a bond or other fixed-income security agrees to pay to the bondholder annually, expressed as a percentage of the bond's face value.

Every Three Months

A quarter-yearly interval, commonly used in the context of financial payments, reporting periods, or other scheduled events.

Coupon Payments

Regular interest payments made to bondholders as compensation for the investment and loan of capital.

Semi-Annual Interest

Interest that is calculated and paid twice a year, often used in bond markets.