Externalities Show That Even If Both Parties to an Exchange

question 73

True/False

Externalities show that even if both parties to an exchange receive actual benefits from the exchange,other parties external to the exchange might be adversely affected.

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Definitions:

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, typically expressed in years.

Coupon

The interest rate on a bond that the issuer promises to pay to the holder until maturity.

Zero-Coupon Bond

A bond that does not pay periodic interest and is sold at a discount from its face value, with the return being the difference between the purchase price and the bond's face value at maturity.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, often indicating the bond's price volatility.