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If there is an unexpected decrease in the interest rate, the market price of an outstanding long term bond (for example, one that will not

If there is an unexpected decrease in the interest rate, the market price of an outstanding long term bond (for example, one that will not mature for another 20 years) will generally

a. increase.

b. decrease, but by less than the proportional decrease in the interest rate.

c. decrease in proportion to the decline in the interest rate.

d. remain the same; the market value of outstanding bonds is unaffected by the interest rate.

Consumers find insurance valuable because

a. it eliminates risk.

b. it reduces risk.

c. it provides valuable information about the relative costs of risky behavior.

d. it increases risk.

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