Recall the Application About the Price of Vanity License Plates

question 42

Multiple Choice

Recall the Application about the price of vanity license plates in Virginia to answer the following question(s) .
-Recall the Application. Which of the following is a reason for the state of Virginia to increase its revenue while the price for vanity plates increases?

• A) The demand for vanity plates in Virginia is inelastic.
• B) The demand for vanity plates in Virginia is elastic.
• C) The demand for vanity plates in Virginia is equal to 1.
• D) There is insufficient information to draw a conclusion.

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Definitions:

Duration

A financial metric that estimates the weighted average time it takes for an investor to be repaid the bond's cash flows, serving as a measure of interest rate sensitivity.

Promised Yield

The return that a bond issuer agrees to pay to the bondholder until maturity, expressed as an annual percentage.

Coupon Rate

The annual interest rate paid by a bond issuer to the bondholder, usually expressed as a percentage of the bond's face value.

Duration

A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates, often expressed in years.