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 YIELD: The rate of return on a financial asset. In some simple cases, the yield on a financial asset, like commercial paper, corporate bond, or government security, is the asset's interest rate. However, as a more general rule, the yield includes both the interest earned from an asset plus any changes in the asset's price. Suppose, for example, that a \$100,000 bond has a 10 percent interest rate, such that the holder receives \$10,000 interest per year. If the price of the bond increases over the course of the year from \$100,000 to \$105,000, then the bond's yield is greater than 10 percent. It includes the \$10,000 interest plus the \$5,000 bump in the price, giving a yield of 15 percent. Because bonds and similar financial assets often have fixed interest payments, their prices and subsequently yields move up and down as economic conditions change.
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 Lesson 13: The Firm | Unit 2: Objectives Page: 9 of 24

 Topic: Real World Firms <=PAGE BACK | PAGE NEXT=>

• Four alternative objectives:

• Sales Maximization

• Some firms might try to maximize their sales, either in terms of quantity or revenue, rather than to maximize profit.

• Owner Utility

• The owners or entrepreneurs of a firm seek to maximize profit because this generates income that can be used to acquire wants-and-needs satisfying goods and services.

• Employee Utility

• A firm's profit might also be sacrificed to enhance the utility of employees.

• Social Responsibility

• A firm might be motivated to forego profit in the pursuit of a "better" society.

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POINT ELASTICITY

The relative responsiveness of a change in one variable (call it B) to an infinitesimally small change in another variable (call it A). The notion of point elasticity typically comes into play when discussing the elasticity at a specific point on a curve.

 BROWN PRAGMATOX[What's This?] Today, you are likely to spend a great deal of time searching for rummage sales wanting to buy either a coffee cup commemorating the 2000 Olympics or a birthday gift for your grandmother. Be on the lookout for the last item on a shelf.Your Complete Scope
 Ragnar Frisch and Jan Tinbergen were the 1st Nobel Prize winners in Economics in 1969.
 "It is very rare that you meet with obstacles in this world (that) the humblest man has not the faculties to surmount. "-- Henry David Thoreau, philosopher
 MSEMean Square Error
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