Using the arc convention, compute the approximate elasticity of demand from the following data:

• A.0.87
• B.1.14
• C.1.5

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A well-functioning secondary market has all of the following characteristics EXCEPT

• A.provides liquidity.
• B.is located in a central physical location.
• C.provides price continuity and low transaction costs.

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What would be bid-ask spread be for pound sterling quoted at $=1.4419-28?

• A.0.64%
• B.0.062%
• C.0.63%

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All of the following are examples of "accrued expense" types of liabilities except the liability for:

• A.short-term notes taken out at a bank during the year.
• B.property taxes owed to local governments for the year.
• C.estimated product warranty costs on products sold during the year.

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You invest $100 in a risky asset with an expected rate of return of 12% and a standard deviation of
1 5% and a T-bill with a rate of return of 5%. A portfolio that has an expected outcome of $115 is formed by:

• A.investing $80 in the risky asset and $20 in the risk-free asset.
• B.borrowing $43 at the risk-free rate and investing the total amount ($143) in the riskyasset.
• C.investing $43 in the risky asset and $57 in the riskless asset.

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