Assume the demand function for XYZ exhibits a constant elasticity of 4. The current demand in the
Question:
Assume the demand function for XYZ exhibits a constant elasticity of −4. The current demand in the market is 10 million shares, and the current price of XYZ is $64. If you try to sell an additional 2.5 million shares, by how much will the price of XYZ decrease?
What will the proceeds from the sale be? Use Equation 9.3 to get your answer.
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Step by Step Answer:
We can rearrange Equation 93 to get the approximate change in price ...View the full answer
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Related Book For 
Quantitative Financial Risk Management
ISBN: 9781119522201,9781119522263
1st Edition
Authors: Michael B. Miller
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