Suppose that legalizing the use of heroinheroin would decrease its price by 9494 percent. if the price elasticity of demand for
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Incomplete question. The options read:
a. 5.16
b. 5.35
c. 5.56
d. 5.77
e. 5.99
Answer:
<u>b. 5.35</u>
Explanation:
Remember, we use the Macaulay duration to determine the weighted average time before any bondholder would start to receive their expected bond's cash flows.
Hence, using the formula attached below, we could find the Macaulay duration for this scenario. In the above formula, where:
C= the periodic coupon payment
y= the periodic yield
M= the bond’s maturity value
n= duration of bond in periods.
However, another way to get a solution is to employ an advanced calculator.
