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A Treasury Bond Due in One Year Has a Yield

question 44

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A Treasury bond due in one year has a yield of 6.2%;a Treasury bond due in 5 years has a yield of 6.7%.A bond issued by General Motors due in 5 years has a yield of 7.9%;a bond issued by Exxon due in one year has a yield of 7.2%.The default risk premiums on the bonds issued by Exxon and General Motors,respectively,are

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Definitions:

Average Cost

The total cost divided by the number of goods produced, also known as cost per unit.

Total-Cost Curve

A graph that shows the relationship between the total cost incurred by a firm and the level of output produced.

Production Function

An equation or graph showing the maximum output that can be produced with a given set of inputs, such as labor and capital, under existing technology.

Marginal Product

Enhanced output originating from the inclusion of an additional input unit.

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