Say Anna Chooses Between Partying and Studying

question 35

Multiple Choice

Say Anna chooses between partying and studying. Supposed her indifference curves satisfied all the assumptions about consumer theory, but she also liked studying a lot more than partying. If the price of studying increased, then Anna would consume

• A)more studying and less partying.
• B)less studying and more partying.
• C)the same as before.
• D)no partying at all, in order to consumer more studying.

---

Definitions:

Semi-Annual Compounding

The process of calculating interest on both the initial principal and the accumulated interest over two periods per year.

Par Value

The face value of a bond or stock, which is the amount paid back to the bondholder at maturity, or a nominal value of a share as stated in the corporation's charter.

Required Return

Required Return is the minimum rate of return an investor expects to receive from an investment considering its risk level.

Yield To Maturity

The total return expected on a bond if it is held until the maturity date, considering all payments from the bond including coupon and principal repayment.