When a Price Floor That Has an Impact Is Imposed,the

question 199

Multiple Choice

When a price floor that has an impact is imposed,the quantity

• A)demanded will decrease and quantity supplied will increase.
• B)supplied will decrease and quantity demanded will increase.
• C)demanded will decrease and quantity supplied will not change.
• D)supplied will decrease and quantity demanded will not change.

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Definitions:

Duration

A measure of the sensitivity of the price of a bond or a fixed income portfolio to changes in interest rates.

Interest-Rate Risk

The possibility of incurring losses in investments as a result of variations in interest rates, especially impacting fixed-income securities.

Coupon

The interest rate paid by a bond, usually expressed as a percentage of the bond's face value.

Cash Flow Matching

A form of immunization, matching cash flows from a bond portfolio with those of an obligation.