When Demand Is Elastic

question 65

Multiple Choice

When demand is elastic,

• A)the percentage change in price is greater than the percentage change in quantity demanded.
• B)price increases raise total revenue.
• C)the buyer is sensitive to changes in price.
• D)the elasticity coefficient is greater than zero,but less than one.

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Definitions:

Relative Value Strategy

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Nearly Identical Duration

A characteristic of two or more financial instruments whose cash-flows occur over a similar time frame, making their sensitivity to interest rate changes similar.

Hedge Fund Fee Structure

The compensation arrangement between hedge funds and their managers, typically involving a management fee plus a performance fee based on the fund's returns.