If a specific subsidy (negative tax) of s is given to only one competitive firm, how should that firm change its output level to maximize its profit, and how does its maximum profit change? Let the market price be p, the marginal cost of production (prior to the subsidy) for the firm be MC, and the subsidy bes To maximize profit with the subsidy, the firm should

A, increase its production until p=s.
B. not change its level of production. S.
C. increase its production until p-MC + s
D. increase its production until p MC. 0 E. increase its production until p= MC-s S. The firm's profit with the subsidy will

Risk is the risk of a decline in a bond's value due to an increase in interest rates. this risk is higher on bonds that have long maturities than on bonds that will mature in the near future. risk is the risk that a decline in interest rates will lead to a decline in income from a bond portfolio. this risk is obviously high on callable bonds. it is also high on short-term bonds because the shorter the bond's maturity, the fewer the years before the relatively high old-coupon bonds will be replaced with new low-coupon issues. which type of risk is more relevant to an investor depends on the investor's , which is the period of time an investor plans to hold a particular investment. longer maturity bonds have high risk but low risk, while higher coupon bonds have a higher level of risk and a lower level of risk. to account for the effects related to both a bond's maturity and coupon, many analysts focus on a measure called , which is the weighted average of the time it takes to receive each of the bond's cash flows. conceptual question: which of the following bonds would have the largest duration? a)10year-zero coupon bonds b)10year-7% annual coupon bonds c)10year-3% annual coupon bonds d)5year-3% annual coupon bonds e)3year-7% annual coupon bonds