In this case, the first payment would be the present value of the "in arrears" amount, discounted at LIBOR. (1,000,000)(.06)/ (1.0475)1 = 57,279.24

An automatic stabilizer is anything that would decrease the government budget surplus during slow economies and increase the surplus during strong economic periods. During slow economic periods, bankruptcies are likely to rise, and by paying a portion of the defunct firms' debts, the government is injecting demand into the economy. This should be distinguished from an expansionary fiscal policy, because the program is not designed to expand national income, but to stabilize a slowdown without the need for further government action.

Verification is not part of the eight sections, although strongly recommended.

Quotas are more harmful than tariffs because the quota restricts supply domestically and diverts resources from efficient to inefficient use. Additionally, a tariff transfers revenue from consumers to the government while a quota transfers revenue from domestic consumers to foreign producers.

To be indifferent, both securities must yield the same total dollar amount at the end of the investment horizon, which in this case is 12 years.
Option I: Buy a 10-year bond and then a 2-year bond. Option II: Buy a 12-year bond.
When indifferent: Option I = Option II
(1.064)10 (1.107)2 = (1 + x)12= 7.1%
where x is the yield on the 12-year bond.