It is July 10, 2017. You have a $10,000 semi-annual bond with a coupon rate of 3.000% which matures April 27, 2029. The bond is priced to yield 13.000%, the duration is 8.56 years, and the convexity is 83.97 years squared. Using a duration estimate only, we predict that if market yields decrease by 100 basis points then the price of this bond will increase by

1. which one of the following would be an example of a supply-side market failure? a. a gas station is slowly leaking diesel fuel from its underground tanks, and after the leak is discovered, the business immediately cleans up the pollution at its own expense. b. a gas station is slowly leaking diesel fuel from its underground tanks, but the state uses taxpayer money to clean up the pollution rather than requiring the business to pay. c. your business wants to attract repeat customers by putting on a customer-appreciation picnic at a public park, but you decide not to because you couldn't prevent noncustomers from consuming the food and entertainment you provided. d. everyone rushes to the local retail outlet at midnight on the day of the release of a new video game console, and the store runs out before everyone is able to buy one.