The Use of Public Money to Attract Baseball Spring Training

question 32

Multiple Choice

The use of public money to attract baseball spring training sites

• A)has no economic rationale.
• B)makes sense because such sites attract many tourists to that location during the months of February and March when those tourists might go elsewhere to follow their team if the money is not spent on a facility.
• C)suffers from exactly the same logical problem (of local substitution)that the use of public money to keep an NFL team suffers from.
• D)is always warranted just like building an NFL facility is always warranted.

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Definitions:

Zero-Coupon Bond

A debt security that doesn't pay interest (a coupon) but is traded at a deep discount, offering profit at maturity when the bond is redeemed for its full face value.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates.

Yield To Maturity

The total return anticipated on a bond if it is held until the date it matures, including all payments of principal and interest.

Immunization

A strategy that matches durations of assets and liabilities so as to make net worth unaffected by interest rate movements.