Answer:
Because the supply of land in upstate New York <u>perfectly inelastic</u>, buyers in upstate New York <u>economic rent</u> when they purchase their land.
Owners realize that the rental price of land is much lower in Upstate New York than in more densely populated areas like the Upper West Side of New York City. One of the possible explanations for this rent difference is that there is a low <u>demand for</u> land with low productivity.
Some land owners decide to build parking lots in the Upper West Side of New York City. The supply curve for land to be used for parking lots is <u>upward sloping</u>.
Answer:
The correct answer is letter "A": Individuals tend to gamble more with their money when the future is uncertain.
Explanation:
Risk aversion in Finance describes an investor who is just willing to accept a small level of risk on his investments. A risk-averse investor likes less risk and is prepared to accept fewer returns because of his choice. In a few words, risk aversion represents the likelihood investors prefer to secure their investments instead of risking more expecting higher returns.
Thus, <em>individuals gambling more when the future is uncertain reflects an opposite scenario to risk aversion.</em>
Answer:
Each 1000 par value bond will sell at issuance for $110.71
Explanation:
A zero coupon bond is a bond that does not pay interest and is issued at a heavy discount which is a compensation for the interest payment. The value of the zero coupon bond today is calculated using the present value of the face value of zero coupon bond. The formula to calculate the present value of the zero coupon bonds is,
PV = Face value / (1+r)^t
As the required rate is quoted in annual terms, we will divide it by 2 to calculate the semi annual required rate and multiply the time (annual) by 2 to calculate the semi annual periods in 25 years.
Semi annual required rate = 9% / 2 = 4.5%
Semi annual periods (t) = 25 * 2 = 50
PV = 1000 / (1+0.045)^50
PV = $110.70965 rounded off to $110.71
