A poor country might benefit from foreign portfolio investment or foreign direct investment as they will get new varieties of capital inputs through FDI, it will also benefit by getting human capital development, and more and more profit will be generated through taxes.
Foreign direct investment allows the transfer of technology in the form of new varieties of capital inputs, FDI also promotes a higher level of competition in the domestic market of inputs.
Recipients of FDI or we can say the poor country generally gain employee training in the course of operating the new businesses, which leads to a human capital development in the host country.
Profits are also generated by the FDI always contribute to corporate tax revenues in the host country or the poor country.
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Answer:
$85.71
Explanation:
To calculate the price to pay for the stock of Hudson Corporation, we use the dividend discount model formula stated as follows:
P = Next year dividend ÷ (r - g) ................................ (1)
Where,
P = stock price today = ?
Next year dividend = $3.00
r = required return = 7.10% % = 0.071
g = dividend growth rate = 3.60% = 0.036
These above values are now substituted into equation (1) as follows:
P = 3 ÷ (0.071 - 0.036) = 3 ÷ 0.035 = $85.71
Therefore, I will pay $85.71 for Hudson Corporation's stock today.
Answer:
a) The bond sells at a price below par.
Explanation:
It means that the investor needs to pay a price lower than the par value the get a treasury bond, the coupons are fixed and the return of the principal it's the same as issued, if the yield to maturity (7,5%, discount rate in the present value formula) it's less than the rate of coupons (8%), then the price must be lower than the par value to meet the result.
When the bonds are traded at par value it means that the coupon rate it's the same of the yield to maturity.
And fi the bonds are traded at a price above par then the price of the bond are higher than the issued price.
It would be D
because it depends on how much the bidder values the item.