For the following instruments below, use the criteria for va…

For the following instruments below, use the criteria for valuing a financial instrument to choose the one with the highest value: a. An insurance policy that pays out in the event of serious illness or one that pays out when you are healthy, assuming you are equally likely to be ill or healthy.  The insurance policy that pays out when you are ________________ because this is when the payment is needed the ________________

Consider two scenarios. In the first, the nominal interest r…

Consider two scenarios. In the first, the nominal interest rate is 12 percent and the expected rate of inflation is 8 percent. In the second, the nominal interest rate is 10 percent and the expected rate of inflation is 4 percent. In which situation would you rather be a lender? In which would you rather be a borrower?  In the first scenario you would rather be a__________ and in the second scenario, you would rather be a __________________

You visit a tropical island that has only four goods in its…

You visit a tropical island that has only four goods in its economy—oranges, pineapples, coconuts, and bananas. There is no money in this economy. a. How many price pairs are possible in this economy?  (You should check your answer using the n(n − 1)/2 formula where n is the number of goods.)