Diminishing Marginal Utility of Wealth Implies That the Utility Function

question 70

Multiple Choice

Diminishing marginal utility of wealth implies that the utility function is

• A)upward-sloping and has decreasing slope.
• B)upward-sloping and has increasing slope.
• C)downward-sloping and has decreasing slope.
• D)downward-sloping and has increasing slope.

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Definitions:

Coupon Bonds

Debt securities that pay holders a fixed interest rate (the coupon) on a periodic basis until the bond matures, at which point the principal amount is repaid.

Par

The face value of a bond or other financial instrument, typically the amount at which it will be paid out upon maturity.

Yield

The earnings generated from an investment, including interest or dividends, that result from owning a specific financial instrument.

Premium Bond

A bond sold for more than its face value, typically occurring when its interest rate is higher than the current market rate.