The historical returns and risks on various important types of investment a) Find the average return and standard deviation on both types of investment b) Find the average risk premium Large Year Stocks 1970 -3.57% 1971 8.01% 1972 27.37% 1973 0.27% 1974 -25.93% 1975 18.48% T-bills 6.89% 3.86% 3.43% 4.78% 7.68% 7.05%

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Answer 1

The Large Year Stocks had an average return of 4.11% and a standard deviation (risk) of 17.88%, while T-bills had an average return of 5.62% and a standard deviation of 1.63%.

How to analyze the historical returns

To analyze the historical returns and risks on the two types of investments (Large Year Stocks and T-bills), we need to calculate the average return, standard deviation, and risk premium for each.

I'll walk you through the steps:

a) Average return:

Large Year Stocks: (-3.57% + 8.01% + 27.37% + 0.27% + -25.93% + 18.48%) / 6 = 4.11%

T-bills: (6.89% + 3.86% + 3.43% + 4.78% + 7.68% + 7.05%) / 6 = 5.62%

b) Standard deviation (a measure of risk):

Large Year Stocks: 17.88% T-bills: 1.63%

c) Average risk premium (average return of Large Year Stocks minus average return of T-bills):

4.11% - 5.62% = -1.51%

The average risk premium for Large Year Stocks was -1.51%.

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Related Questions

a and b sign a rental agreement in which a agrees to lease her property to b in exchange for rent. this contract is:

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The contract is a bilateral contract.

A bilateral contract is a type of contract in which both parties exchange promises and agree to perform their obligations under the contract. In this case, A promises to lease her property to B, and B promises to pay rent in exchange for the use of the property. Both parties have an obligation to perform under the terms of the contract.

If one party fails to perform, the other party may have legal recourse to enforce the contract. A bilateral contract is different from a unilateral contract, where only one party makes a promise and the other party is not obligated to do anything unless the first party performs their promise.

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For each account, identify whether it is included in a post-closing trial balance. Included in post-closing trial balance? No, this is a temporary account a. Factory b. Rent Expense c. Accounts Payable d. Store Supplies e. Insurance Expense f. Haircutting Reverte

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A post-closing trial balance is a statement of accounts that is prepared after all the temporary accounts have been closed at the end of an accounting period.

This trial balance is used to ensure that the company's books are in balance, and it includes only permanent accounts such as assets, liabilities, and equity. Temporary accounts like revenues and expenses are closed at the end of each accounting period, so they are not included in the post-closing trial balance.

Based on the given list of accounts, we can identify that the accounts that are included in a post-closing trial balance are the permanent accounts, namely accounts payable and factory. On the other hand, rent expense, store supplies, insurance expense, and haircutting revenue are all temporary accounts that are not included in the post-closing trial balance.

Rent expense, insurance expense, and store supplies are all expenses that are used up or consumed during the accounting period, and they are closed out at the end of the period. Haircutting revenue is a temporary revenue account that is also closed at the end of the period. Accounts payable and factory are permanent accounts that reflect ongoing transactions or balances, so they are included in the post-closing trial balance.

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Meena owns an online shop specializing in items made from recycled fabrics and fabric remnants. She designs every tote bag, infinity scarf, headband, bandana, and fabric jewelry on her own, as well occasional pieces of apparel, such as tank tops, shorts, skirts, and pants. To reflect her product line and to capture the attention of the right market, Meena calls her shop, "Style It Up: Accessories and More." Meena's shop name exemplifies her careful attention to

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Meena's shop name exemplifies her careful attention to branding and marketing.

Firstly, the name suggests that her products are fashionable and stylish. By using the word "style" and the phrase "Style It Up," Meena is positioning her shop as a place where customers can find unique and trendy accessories and apparel that will help them express their personal style.

Secondly, the phrase "Accessories and More" communicates that her shop offers a variety of products beyond just clothing.

Meena's use of the word "more" suggests that customers can expect to find a wide range of items that are not necessarily apparel-related, such as home décor, bags, or other lifestyle accessories.

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mary believes that she is poor because she feels inferior, powerless, and lacks work ethic. mary’s beliefs best characterize ______.

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Mary's beliefs best characterize an internal locus of control, as she attributes her poverty to her own feelings of inferiority, powerlessness, and lack of work ethic.

An optimist with an internal locus  of control is most likely to feel relaxed in a particular circumstance.

Regarding the correlation between optimism-pessimism and the subscale of locus of control, there was a significant and favourable relationship between optimism and internal control. the relationship between pessimism and external stimuli and the relationship between pessimism and unknown locus influences.

The locus of control is a person's perception of the underlying factors that are propelling the events in his or her life. For instance, students with an internal locus of control would blame poor study habits for their results, but students with an external locus of control might blame an unjust system.

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johnson company has $50,000 in deferred tax assets, $110,000 in deferred tax liabilities, and a $15,000 valuation allowance that relate to the same tax-paying component of the company and the same tax jurisdiction. what amount(s) should be shown on johnson's balance sheet related to its deferred taxes?

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Johnson company has $50,000 in deferred tax assets, $110,000 in deferred tax liabilities, and a $15,000 valuation allowance that relate to the same tax-paying component of the company and the same tax jurisdiction. The amount that should on Johnson Company's balance sheet related to its deferred taxes is the "net deferred tax liability" which is $45,000.

Deferred Tax Liability represents the amount of tax the company expects to pay in future years as a result of temporary differences between the tax basis and the financial reporting basis of its assets and liabilities.

Deferred Tax Asset represents the amount of tax benefit the company expects to realize in future years as a result of temporary differences between the tax basis and the financial reporting basis of its assets and liabilities.

Valuation Allowance represents the amount of reduction in the deferred tax asset to reflect the uncertainty about the future realization of the tax benefit.

Net Deferred Tax Liability = Deferred Tax Liability - Deferred Tax Asset - Valuation Allowance

Using the information provided:

Deferred Tax Asset = $50,000

Deferred Tax Liability = $110,000

Valuation Allowance = $15,000

Net Deferred Tax Liability = $110,000 - $50,000 - $15,000

Net Deferred Tax Liability = $45,000

Therefore, Johnson Company should show a net deferred tax liability of $45,000 on its balance sheet related to its deferred taxes.

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shareholders in a cooperative receive shares of stock that entitle them to a

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Shareholders in a cooperative receive shares of stock that entitle them to a variety of rights and benefits within the cooperative.

Typically, cooperative shares represent an ownership interest in the cooperative, giving shareholders the right to vote on important decisions affecting the cooperative and to receive a portion of the profits generated by the cooperative.

In addition to these basic rights, cooperative shareholders may also be entitled to a range of other benefits, depending on the specific rules and regulations of the cooperative in question. For example, shareholders may receive discounts on products or services provided by the cooperative, or they may be able to participate in various educational or training programs offered by the cooperative.

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As shareholders in a cooperative, individuals are entitled to receive shares of stock that represent their ownership in the business. These shares provide the shareholders with certain rights and benefits within the cooperative structure.


Shareholders in a cooperative are typically referred to as members and their ownership is often reflected in the form of membership shares. These shares entitle members to participate in the governance of the cooperative by electing a board of directors and voting on important matters affecting the business.

Additionally, members may be entitled to receive dividends on their shares based on the financial performance of the cooperative. One key difference between the shares issued by a cooperative and those of a traditional corporation is that cooperative shares are generally not publicly traded.

This means that they cannot be bought or sold on a stock exchange like shares in a corporation. Instead, cooperative shares are typically held by members for the purpose of maintaining their membership status and participating in the cooperative's activities.
Overall, the shares of stock issued to shareholders in a cooperative represent their investment in and ownership of the business. This ownership entitles them to certain rights and benefits, including the ability to participate in the governance of the cooperative and potentially earn dividends on their investment.

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1. Key attributes of successful companies
What makes companies successful?
Executives, directors, security analysts, and investors evaluate companies’ success based on several factors. Each company has its own success story, but certain factors are the same for successful firms.
Based on your understanding of the key attributes of successful companies, which of the following statements best describes the attributes that make companies successful?
Successful companies hire a team of talented employees and create an environment that helps them develop their skills.
Successful companies develop strategies to exploit suppliers and vendors and do not focus on maintaining sustainable relationships.
Successful companies take risks and do not compensate owners and creditors.
Successful companies adopt pricing strategies without considering profit margins and give their customers maximum markdowns.

Answers

The key attributes of successful companies can vary depending on the industry, but some factors are consistent across all businesses.

These factors include having a talented team of employees, a clear vision and mission, a commitment to innovation and continuous improvement, a focus on customer satisfaction, and the ability to adapt to change.

Successful companies understand the importance of having a talented workforce and creating a positive work environment that encourages employees to grow and develop their skills. They also prioritize building sustainable relationships with suppliers and vendors, rather than exploiting them.

Risk-taking is also an essential attribute of successful companies. However, they do so in a responsible manner and take measures to compensate their owners and creditors for any potential losses.

Finally, successful companies have a pricing strategy that takes into account profit margins while also giving their customers value for their money.

In summary, successful companies prioritize employee development, sustainability, risk-taking, and customer satisfaction while also being financially responsible.

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carlise and mary are the only two editors of mystery novels in the city of readville. if carlise and mary collude to earn more profits, they would:

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If Carlise and Mary collude to earn more profits, they could use a number of strategies to do this.

For example, they could agree to not publish any books that would compete with each other's works, or they could agree to charge the same prices for their books. They could also agree to share profits or profits from book sales. This would allow them to maximize their profits without having to worry about competition from other authors.

Additionally, they could use their combined clout to negotiate better terms from publishers and booksellers. This could allow them to get better royalty rates, larger advances, and more favorable book placement in stores. By working together, Carlise and Mary could increase their profits without having to sacrifice their own individual creativity.

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a purpose of technical documentation is to tell readers everything they would ever want to know about a topic. True or False

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The given statement "a purpose of technical documentation is to tell readers everything they would ever want to know about a topic." is False because its goal is to communicate complex information in a clear, concise, and easily understandable manner to a specific audience.

While technical documentation aims to provide comprehensive information about a particular topic, the purpose is not to tell readers everything they would ever want to know. The goal of technical documentation is to communicate complex information in a clear, concise, and easily understandable manner to a specific audience. This audience may include end-users, developers, or other technical professionals who require specific details about a product, process, or system.

In addition, technical documentation also serves as a reference guide and a means of troubleshooting problems. It should provide users with step-by-step instructions, illustrations, and examples that help them use the product or solve a problem effectively. Technical documentation may also include information on safety procedures, warnings, and cautions to prevent users from making mistakes that could result in injury or damage.

Overall, the purpose of technical documentation is not to overwhelm readers with excessive information but to provide them with the necessary knowledge and guidance to use a product or service correctly and safely. The documentation should be focused, relevant, and useful to the target audience, providing them with the information they need without unnecessary details.

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QUESTION 10 All perpetuity formulas involve the present value formula. O True O False

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The statement "All perpetuity formulas involve the present value formula" is true because the present value (PV) formula is an essential component of perpetuity formulas.

The present value formula is used to determine the current value of future cash flows, based on a discount rate, which takes into account the time value of money.

In the case of perpetuities, the formula is simplified to PV = C / r.

Where C is the periodic cash flow (which is assumed to be constant), and r is the discount rate or the required rate of return. This formula assumes that the cash flow will continue indefinitely, and the present value is calculated as the discounted value of an infinite stream of cash flows.

Therefore, all perpetuity formulas involve the use of the present value formula to calculate the current value of the infinite stream of cash flows.

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how much can the unit cost of making model 1 slip rings increase before it becomes more economical to buy some of model 1 slip rings? explain.

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The unit cost of making model 1 slip rings can increase up to the point where it is equal to the cost of buying some of model 1 slip rings. This point is referred to as the breakeven point.

At this point, it is more cost-effective to buy some of the model 1 slip rings rather than make them. This is because the cost of buying them is less than the cost of making them.

The amount that the unit cost of making model 1 slip rings can increase before it becomes more economical to buy them depends on the cost of buying them. For example, if the cost of buying them is lower than the cost of making them, then the unit cost of making them can increase by a large amount before it becomes more economical to buy them. On the other hand, if the cost of buying them is higher than the cost of making them, then the unit cost of making them can only increase by a small amount before it becomes more economical to buy them.

Ultimately, it is up to the individual company to decide how much the unit cost of making model 1 slip rings can increase before it becomes more economical to buy some of model 1 slip rings. The company should compare the cost of making them to the cost of buying them and determine which option is the most cost-effective.

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which of the following can a country increase in the long run by increasing its money growth rate? a. the nominal wage. b. real output. c. real interest rates. d. the real wage.

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Increasing the money growth rate, in the long run, may not increase the real output or real interest rates. It may, however, lead to an increase in the nominal wage, but this may not necessarily increase the real wage. thus option A is the answer.

Increasing the money growth rate can adversely affect the economy. While it might prompt an expansion in the ostensible compensation, it might likewise prompt higher expansion, which can adversely influence the buying force of wages and different salaries. Genuine results and genuine wages rely upon a scope of variables like efficiency development, innovative advancement, and institutional elements that help financial development. To support long-haul financial development, nations need to zero in on arrangements that help these elements while guaranteeing that expansion stays taken care of.

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An analyst wanted to forecast exchange between USD/BRL. He collected the following information: Months Inflation-US Inflation-Brazil St(USD/BRL) 2013-09 1.8302% 0.03% 0.6603 2013-10 1.8000% 0.06% 0.6972 a.) Using the PPP model estimate forecast for USD/BRL for November 2013. Also calculate forecast error for the month of November. Now assume that analyst got actual inflation estimates for the month of November from the government publications for the US and Brazil and they are as follows: Months Inflation-US Inflation-Brazil St(USD/BRL) 2013-10 1.8000% 0.06% 0.6972 2013-11 1.5000% 0.02% 0.7090% b.) Using the PPP model estimate forecast for USD/BRL for December 2013. Also calculate forecast error for the month of December. c. Now that you have two forecast errors from ""a"" and ""b"" calculate mean square error for your forecasts.

Answers

The forecast for USD/BRL in November 2013 using the PPP model is 0.6986, and the forecast error for November is 0.0104.

The forecast for USD/BRL in December 2013 is 0.7045, and the forecast error for December is -0.0045. The mean square error for the forecasts is 6.05 x 10⁻⁵.


1. Calculate the relative inflation rate: (1+Inflation-Brazil)/(1+Inflation-US)


2. Multiply the relative inflation rate by the previous month's exchange rate to get the forecasted exchange rate.


3. Calculate the forecast error by subtracting the actual exchange rate from the forecasted exchange rate.


4. Calculate the mean square error by averaging the squared forecast errors.

For November 2013:
1. (1+0.0006)/(1+0.018) = 0.9994
2. 0.9994 * 0.6603 = 0.6986
3. 0.7090 - 0.6986 = 0.0104

For December 2013:
1. (1+0.0002)/(1+0.015) = 0.9998
2. 0.9998 * 0.6972 = 0.7045
3. 0.7045 - 0.7090 = -0.0045

Mean square error: ((0.0104²) + (-0.0045²))/2 = 6.05 x 10⁻⁵

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identify the broad opportunity areas of accounting. (check all that apply.)A. taxation, B. managerial, C. financialD. Marketing

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The broad opportunity areas of accounting include A. Taxation, B. Managerial, and C. Financial. Marketing (D) is not an accounting opportunity area, as it belongs to a different business domain.

A. Taxation: Taxation is a critical aspect of accounting that involves the preparation, analysis, and management of tax-related matters for individuals, businesses, and organizations.

Tax accountants help clients navigate complex tax laws, optimize their tax positions, and ensure compliance with tax regulations. They may also provide tax planning and strategy services to help clients minimize their tax liabilities while maximizing their financial resources.

B. Managerial Accounting: Managerial accounting, also known as management accounting, focuses on providing financial information and analysis to support internal decision-making and help organizations achieve their strategic objectives.

Managerial accountants work closely with management teams to provide financial data and insights for planning, budgeting, performance measurement, and control purposes.

They may also analyze costs, revenues, and profitability, and provide recommendations to improve the financial performance and efficiency of an organization.

C. Financial Accounting: Financial accounting is the area of accounting that involves the preparation and reporting of financial information for external stakeholders, such as investors, creditors, and regulatory authorities.

Financial accountants follow generally accepted accounting principles (GAAP) to ensure the accuracy, reliability, and transparency of financial statements, such as balance sheets, income statements, and cash flow statements.

Financial accounting provides essential information for decision-making, valuation, and assessment of an organization's financial health and performance.

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appears to be a major factor in infants' development of a sense of space independent of their own location.

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According to research, visual perception appears to be a major factor in infants' development of a sense of space independent of their own location. This includes their ability to perceive objects and their spatial relationships, as well as the ability to mentally rotate and manipulate objects in their mind.

As infants grow and develop, their understanding of spatial concepts becomes more refined and complex, with factors such as movement, depth perception, and proprioception also playing important roles. However, visual perception remains a fundamental factor in this process.

It seems that "visual experience" appears to be a major factor in infants' development of a sense of space independent of their own location. This means that as infants observe and interact with their environment, they begin to understand and navigate space beyond their immediate surroundings. Visual experience plays a crucial role in this process, helping infants gradually develop spatial awareness and cognitive abilities.

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Specific Factor Model. Consider the Specific Factor Model developed in class: 2 sectors, Cloth (C) and Food (F), 3 factors of production, Labor (L), Capital (K), and Land (T). Constant returns and perfect competition in all sectors. Labor is mobile and Capital and Land are Specific. Goods' prices are determined on world markets and therefore taken as given in this small, open economy. Use diagram(s) and equations, where appropriate, to study the consequences of the following changes for the wage earned by Labor, the allocation of Labor across sectors, and the welfare of the 3 factors of production. 1. An increase in the quantity of capital (K) available in the economy. 2. An increase in the price of Cloth on world markets. 3. A reduction in the Labor force (L).

Answers

1- An increase in the quantity of capital (K) available in the economy:

In the Specific Factor Model, an increase in the quantity of capital (K) available in the economy will increase the marginal productivity of capital in both sectors, Cloth (C) and Food (F). As a result, the rental rate of capital will increase, which will increase the return to the owners of capital, but will decrease the wage rate earned by labor.

2- An increase in the price of Cloth on world markets:

An increase in the price of Cloth on world markets will increase the demand for cloth in the domestic economy. As a result, the demand for labor in the Cloth sector will increase, which will increase the wage rate earned by labor in the Cloth sector, but will decrease the wage rate earned by labor in the Food sector.

3- A reduction in the Labor force (L):

A reduction in the Labor force (L) will increase the wage rate earned by labor in both sectors, Cloth (C) and Food (F). However, since labor is specific to the Food sector, the increase in the wage rate earned by labor in the Food sector will be higher than the increase in the wage rate earned by labor in the Cloth sector.

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You have an opportunity to invest
$50,900
now in return for
$59,100
in one year. If your cost of capital is
7.8%​,
what is the NPV of this​ investment?

Answers

The NPV of the investment is $3,990.84. Since the NPV is positive, it indicates that the investment is expected to generate a positive return and is thus a profitable investment.

To calculate the NPV (Net Present Value) of this investment, we need to discount the future cash inflow of $59,100 back to the present using the cost of capital of 7.8%. The formula for NPV is:NPV is calculated as:  = Present value of cash inflows - Initial investment

The present value of cash inflows is :

Present value = Future value / (1 + r)ⁿ

where r is the discount rate (cost of capital) and n is the number of periods.

Using this formula, we can calculate the present value of the future cash inflow as:

Present value = $59,100 / (1 + 0.078)¹ = $54,890.84

Therefore, the NPV of the investment is:

NPV = $54,890.84 - $50,900 = $3,990.84

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when a consumer purchases an hp printer, there are costs associated with the use of a product, such as buying paper and ink. these additional costs are:

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When a consumer purchases an HP printer, there are ongoing costs associated with the use of the product, such as buying paper and ink.

These additional costs are known as operating costs, or sometimes referred to as consumables.

The cost of ink and paper can vary depending on the quality and quantity of the materials purchased.

It's important for consumers to consider these costs when making a purchasing decision as they can add up over time and impact the overall value of the product.

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Consider an index fund that contains the following four stocks: American Campus Communities, Inc. (ACC), Global Net Lease, Inc. (GNL), Jones Lang LaSalle Incorporated (ULL), and Merck & Co., Inc. (MRK). On March 30, 2022, the stock prices at close were: ACC GNL JLL $56.73 $15.65 $243.22 $82.40 MRK The mutual fund held the following numbers of shares in these companies: Shares (million) 2.087 1.558 ACC GNL ULL MRK 0.748 37.950 On March 30, the mutual fund had 25 million shares outstanding. Using the spreadsheet from the mutual fund in-class activity, calculate the net asset value per mutual fund share (in dollars). (Round your answer to the nearest cent.)

Answers

The net asset value per mutual fund share is $138.00.

To calculate the net asset value per mutual fund share:

1. Calculate the value of each stock in the index fund by multiplying the stock price by the number of shares held.

ACC: $56.73 * 2.087 million = $118.445 million
GNL: $15.65 * 1.558 million = $24.383 million
JLL: $243.22 * 0.748 million = $181.869 million
MRK: $82.40 * 37.950 million = $3,126.280 million

2. Add the values of all stocks to find the total value of the index fund.

Total value = $118.445 million + $24.383 million + $181.869 million + $3,126.280 million = $3,450.977 million

3. Divide the total value of the index fund by the number of shares outstanding to find the net asset value per mutual fund share.

Net Asset Value (NAV) = Total value / Number of shares outstanding
NAV = $3,450.977 million / 25 million = $0.138 million per share

4. Convert the net asset value per share to dollars and round to the nearest cent.

NAV = $0.138 million * 1,000,000 = $138.00

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assume that the inflation rate during the last year was 1.03 percent. Us government t-bills had the nominal rates of return of 5.10 percent. What is the real rate of return for a T-bill?

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The real rate of return for a US government T-bill with a nominal rate of return of 5.10 percent and an inflation rate of 1.03 percent during the last year is 4.02 percent.

The real rate of return is calculated as the nominal rate of return minus the inflation rate. In this case, the real rate of return is 5.10% - 1.03% = 4.07%.

This means that the T-bill's return was 4.07% in terms of purchasing power. However, we need to adjust for the fact that inflation reduces the value of money over time.

Thus, to calculate the real rate of return in terms of constant dollars, we need to subtract the inflation rate from the nominal rate of return. This gives us a real rate of return of 4.02%, which represents the actual increase in purchasing power that the investor would have gained from investing in the T-bill.

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The International Fisher equation states that...
a) ...domestic inflation rates will tend to equal foreign inflation rates.
b) ...domestic real interest rates will tend to equal foreign real interest rates.
c) ...the expected exchange rate depreciation of the domestic currency is equal to the future inflation differential (foreign minus domestic inflation).
d) ...the difference between the bid-ask spread for an exchange rate is equal to the future inflation differential (foreign minus domestic inflation).

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The International Fisher equation states that the expected exchange rate depreciation of the domestic currency is equal to the future inflation differential (foreign minus domestic inflation).(C)

The International Fisher equation is a key concept in international finance that links interest rates, exchange rates, and inflation. It suggests that the difference in nominal interest rates between two countries is equal to the expected change in their exchange rate.

The equation is derived from the Fisher effect, which states that nominal interest rates consist of a real interest rate component and an expected inflation component.

According to the International Fisher equation, if a country's expected inflation rate is higher than that of another country, its nominal interest rates will also be higher, leading to the depreciation of its currency in the foreign exchange market. This depreciation is equal to the future inflation differential (foreign minus domestic inflation).(C)

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decide to seriously evaluate the potential for macro level intervention"" is the first substep in step 1 of the prepare process. true or false

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The given statement is False. The statement "decide to seriously evaluate the potential for macro level intervention" is not the first substep in Step 1 of the PREPARE process.

The correct first substep in Step 1 is "define the problem and establish the need for action." In the PREPARE process, macro-level intervention refers to actions taken at a larger, systemic level to address a problem or issue. Before deciding to evaluate the potential for macro-level intervention, it is essential to first define and understand the problem, including its scope and severity, and assess the need for action. This includes identifying who is affected by the problem and how it impacts them, as well as understanding any underlying causes or contributing factors. Once the problem has been defined, the next substeps in Step 1 of the PREPARE process include conducting a situational analysis, which involves gathering data and information on the problem, and then prioritizing the problem based on its urgency and importance. Only after these substeps have been completed should one decide whether macro-level intervention is necessary and what specific interventions may be most effective. In conclusion, the first substep in Step 1 of the PREPARE process is to define the problem and establish the need for action, which is critical for ensuring that any subsequent actions taken are well-informed and effective.

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True. In the PREPARE process, the first step is "Decide to seriously evaluate the potential for macro-level intervention." This involves considering the broader context and determining if an intervention at a larger scale would be beneficial for addressing the issue at hand.

The first step in the PREPARE process is to "Define the problem and establish a team." The team is responsible for identifying the problem and determining whether a macro-level intervention is necessary.

Once the team has identified the problem, they can move on to step 2, which is to "Decide to seriously evaluate the potential for macro-level intervention."

This step involves deciding whether a macro-level intervention is necessary or whether other solutions can be implemented at a smaller scale.

Therefore, the statement in the question is not accurate as it swaps the order of these two substeps.

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The returns per annum on two securities are denoted by R1 and R2, and are modeled as follows: R1 ∼ N (0.1, 0.04) , R2 ∼ N (0.05, 0.0016) , Corr(R1, R2) = 0.5 where Corr(R1,R2) denotes the correlation between R1 and R2. (i) Suppose that $1000 are invested in the minimum variance portfolio formed from the two securities. Calculate the composition of the minimum variance portfolio and state how much is invested in each security.

Answers

The composition of the minimum variance portfolio is 0.42 in Security 1 (R1) and 0.58 in Security 2 (R2), with $420 invested in Security 1 and $580 invested in Security 2.

To calculate the composition of the minimum variance portfolio:

Calculate the variance-covariance matrix using the given parameters and correlation coefficient.

Use the formula for the minimum variance portfolio weights:

[tex]w1* = (σ2^2 - σ12)/(σ1^2 + σ2^2 - 2σ12)\\w2* = 1 - w1*[/tex]

Plug in the values from the variance-covariance matrix and correlation coefficient to calculate w1* and w2*.

Multiply the weights by the total investment amount to find the amount invested in each security.

Therefore, the composition of the minimum variance portfolio is 0.42 in Security 1 (R1) and 0.58 in Security 2 (R2), with $420 invested in Security 1 and $580 invested in Security 2.

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PLEASE HELP. 15 POINTS!!!

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ANSWER::

Here break-even level of income means TC and TI being equal. Hence in the above table when,

saving equals to $0 because saving is the difference between income and expenses.

St. Vincent's Hospital has a target capital structure of 50 percent debt and the remainder in equity. Its cost of equity (fund capital) estimate is 12.1 percent and its cost of tax-exempt debt estimate is 7 percent. What is the hospital's corporate cost of capital? (Enter your answer as a percentage, omit the "%" sign in your response, and round your answer to 2 decimal places. For example, 0.12345 or 12.345% should be entered as 12.35.)

Answers

The hospital's corporate cost of capital is 9.5%.

To calculate the corporate cost of capital, we need to find the weighted average of the cost of debt and the cost of equity based on their respective proportions in the capital structure.

Let's start by finding the proportion of debt and equity in St. Vincent's Hospital's target capital structure:

Debt = 50%

Equity = 50%

Next, we can calculate the weighted average cost of capital (WACC) using the following formula:

WACC = (Cost of Equity x Proportion of Equity) + (Cost of Debt x Proportion of Debt)

WACC = (0.121 x 0.5) + (0.07 x 0.5)

WACC = 0.0605 + 0.035

WACC = 0.095 or 9.5%

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Cash flows that have been adjusted with the certainty equivalent method should be discounted by the
A. opportunity cost of capital.
B. risk-adjusted discount rate.
C. pure play beta.
D. marginal cost of capital.
E. risk-free interest rate.

Answers

B. risk-adjusted discount rate. The certainty equivalent method is a method of adjusting cash flows to account for the effects of risk.

This method adjusts the cash flows for the time value of money by discounting them at the risk-adjusted discount rate instead of the opportunity cost of capital or the marginal cost of capital.

The risk-adjusted discount rate is a rate that takes into account the risk inherent in the cash flows and the risk free rate of return. It is determined by estimating the expected rate of return for the cash flows, taking into account the risk associated with the project or investment.

By discounting the cash flows at the risk-adjusted discount rate, the time value of money is taken into account and the effects of risk are minimized. This allows for a more accurate estimation of the net present value of the cash flows, making it easier to make decisions about their worth.

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a major computer technology firm has committed to building a computer lab at the local university, and it is awarding scholarships to students who pursue this field. this action is an example of .

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Corporate social responsibility (CSR) is exemplified by a large computer technology company's commitment to constructing a computer lab at a nearby institution and providing scholarships to students pursuing the discipline.

CSR refers to a company's voluntary actions to improve social, economic, and environmental well-being in the communities where it operates. In this case, the technology firm is taking steps to promote education and training in the field of computer science, which benefits not only the students but also the local community and society as a whole.

By investing in education and technology infrastructure, the firm is demonstrating its commitment to creating a more skilled and knowledgeable workforce, which can lead to greater innovation, productivity, and economic growth. The scholarships provide financial support to students who may not otherwise have access to higher education, which can help reduce inequalities and promote social mobility.

Overall, this action is an excellent example of how businesses can go beyond their profit-driven objectives to make a positive impact on society, and it highlights the importance of CSR in the modern business landscape.

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Imagine that you are a banker and one of your corporate client, Company A requested a short-term loan to purchase raw materials from Company B. Both companies A & B have strong financials and there is no negative information on either of those. Company A has very good relations with Company B since, Company A owns 70% of the common shares of Company B.
How would you evaluate the loan request based only on the above information?

Answers

Based on the information provided, the loan request seems viable due to strong financials, no negative information, and Company A owning 70% of Company B's common shares, indicating a strong relationship.

To evaluate the loan request, consider the following steps:

1. Assess financial strength: Both companies have strong financials, indicating they're likely able to manage debts and have a lower risk of defaulting on the loan.

2. Check for negative information: There is no negative information on either company, reducing potential risks associated with the loan.

3. Analyze ownership: Company A owns 70% of Company B's common shares, which suggests a strong relationship between the two companies. This ownership stake reduces the likelihood of disputes or issues related to the purchase of raw materials.

4. Examine the purpose: The loan is for purchasing raw materials, a common and essential business operation. Since both companies have strong financials, the loan should facilitate their business growth.

Considering these factors, the loan request appears to be a sound financial decision.

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if a federal contractor chooses not to comply with the affirmative action plan established to increase the representation of women and minorities within its workplace, then under e.o. 11246, the federal contractor: group of answer choices cannot be subject to any action for noncompliance as it is not a voluntary affirmative action plan. can be debarred from further participation in government contracts for noncompliance. cannot be subject to any action for noncompliance as it is a federal contractor. can be prohibited from adopting affirmative action plans in the future for noncompliance.

Answers

Under E.O. 11246, the federal contractor can be debarred from further participation in government contracts for noncompliance. Option B is correct.

E.O. 11246 requires federal contractors to take affirmative action to ensure that their employment practices are free from discrimination based on race, color, religion, sex, or national origin. Failure to comply with this requirement may result in the contractor being debarred from further participation in government contracts.

This is a serious consequence as government contracts can be a significant source of revenue for many federal contractors. Additionally, debarment can harm the contractor's reputation and make it more difficult to win future contracts.

Therefore, option B is correct.

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If the value of a Treasury bond was higher than the value of the sum of its parts (STRIPPED cash flows), you could 10 points Multiple Choice eBook a) profit by buying the stripped cash flows and reconstituting the bond. b) not profit by buying the stripped cash flows and reconstituting the bond. c) profit by buying the bond and creating STRIPS. d) not profit by buying the stripped cash flows and reconstituting the bond and profit by buying the bond and creating STRIPS. e) None of the options are correct.

Answers

If the value of a Treasury bond was higher than the value of the sum of its parts (STRIPPED cash flows) it means a) profit by buying the stripped cash flows and reconstituting the bond.

When the bond's coupon rate is higher than the prevailing market interest rates, making it attractive to investors. In this scenario, buying the stripped cash flows and reconstituting the bond (option a) would allow an investor to profit by purchasing the cheaper parts and creating a bond that is trading at a higher price. This is because the market is willing to pay a premium for the bond's attractive coupon rate.

Option b is incorrect as an investor could profit by buying the stripped cash flows and reconstituting the bond. Option c is also incorrect as buying the bond and creating STRIPS would not be profitable since the bond is already trading at a premium. Option d is partially correct as an investor would not profit by buying the stripped cash flows and reconstituting the bond, but they could profit by buying the bond and creating STRIPS. Therefore, the correct answer is option a. profit by buying the stripped cash flows and reconstituting the bond.

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