Answer:
They will be able to consume at a point outside their production possibilities frontier.
Explanation:
The Production possibilities frontiers is a curve that shows the various combination of two goods a company can produce when all its resources are fully utilised.
The PPC is concave to the origin. This means that as more quantities of a product is produced, the fewer resources it has available to produce another good. As a result, less of the other product would be produced. So, the opportunity cost of producing a good increase as more and more of that good is produced.
Factors that cause the PPF to shift
1. changes in technology.
2. changes in available resources.
3. changes in the labour force.
A country engages in the specialisation of a good for which it has a comparative advantage in its production and purchases goods for which it has a comparative disadvantage in its production .
an advantage of specialisation is that it allows countries to consume goods for which its not efficient in its production. Thus it allows to consume unattainable goods given the resources of the country. As a result, they will be able to consume at a point outside their production possibilities frontier.
Explanation:
Options prices, known as premiums, are composed of the sum of its intrinsic and time value. Intrinsic value is the price difference between the current stock price and the strike price. An option's time value or extrinsic value of an option is the amount of premium above its intrinsic value.
Answer:
Arbitrage opportunity may exists as the ZCBs selling at different price at same time due to change in their YTM .
The PV of 100 face value zcb with different ytm are different , in this case.
for one year maturity with face value 100 current price = fv/ pv at 8% = 92.59
for Two year maturity with face value 100 current price = fv / Pv at 9% for two years = 84.167 , if the bond holder sell the bond after 1 year only, the price = 91.74 .
a) The arbitrage opportunity exist with buy two bond with face value 100 with maturity of 1 year and face value 110 with maturity of 2 years.
b) profit 0.01 , as difference between PV of both bond at their YTM rate.
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Answer: the correct answer would be <u>Profit center.</u>
Explanation:
hope this helps
