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user100 [1]
1 year ago
11

A Treasury bill with a par value of $100,000 due three months from now is selling today for $97,087 with an effective annual yie

ld of A) 12.40%. B) 12.55%. C) 12.62%. D) 12.68%. E) None of the options are correct.
Business
1 answer:
Zanzabum1 year ago
3 0

The effective annual yield of a treasury bill is equivalent to 12.55%.

Option B is the correct answer.

<h3>What is the treasury bill?</h3>

The treasury bill is the trading instrument that is issued in the money market by the government.

Given values:

Par value: $100,000

Future value: $97,087

Number of years from now: 3 years

Step-1 Computation of interest rate of treasury bill:

\rm\ Interest \rm\ rate \rm\ on\rm\ treasury \rm\ bill=\frac{\rm\ Par \rm\ value - \rm\ Future \rm\ value}{\rm\ Future \rm\ value} \\\rm\ Interest \rm\ rate \rm\ on\rm\ treasury \rm\ bill=\frac{\$100,000-\$97,087}{\$97,087} \\\rm\ Interest \rm\ rate \rm\ on\rm\ treasury \rm\ bill=0.03

Step-2 Computation of equivalent yield the bill:

\rm\ Equivalent \rm\ annual \rm\ yield =(\rm\ 1+ \rm\ interest \rm\ rate)^{\rm\ Number \rm\ of \rm\ years}  - 1\\\rm\ Equivalent \rm\ annual \rm\ yield=(1+0.03)^{4} -1\\\rm\ Equivalent \rm\ annual \rm\ yield=1.01255-1\\\rm\ Equivalent \rm\ annual \rm\ yield=0.01255

Therefore, 12.55% is the equivalent yield on the treasury bill.

Learn more about the equivalent yield in the related link:

brainly.com/question/21275322

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in the theory of percect competition the assumption of easy entry into and exit from the market implies
jeka94

In the theory of perfect competition, the assumption of easy entry into and exit from the market implies <u>zero economic profits in the long run.</u>

<u />

<h3>What Is Perfect Competition?</h3>

The term perfect competition refers to a theoretical market structure. In a perfect competition model, there are no monopolies.

This kind of structure has a number of key characteristics, including:

  • All firms sell an identical product (the product is a commodity or homogeneous).
  • All firms are price takers (they cannot influence the market price of their products).
  • Market share has no influence on prices.
  • Buyers have complete or perfect information (in the past, present, and future) about the product being sold and the prices charged by each firm.
  • Capital resources and labor are perfectly mobile.
  • Firms can enter or exit the market without cost.

There are five assumptions in the perfectly competitive model of markets:

  1. Goods are identical, rival, and excludable.
  2. Buyers and sellers have sufficiently information to make informed decisions.
  3. There are no external effects; and two others. List the two other assumptions and discuss their significance in a sentence or two.
  4. Everyone is a price taker.
  5. There is free entry and exit.

The price taking assumption implies the demand perceived by a seller is perfectly elastic. That is, they can sell as much or as little as they want without affecting the market price. Also, when the firm is a price taker, the profit maximizing rule: MR = MC, can be written P = MC since price equal marginal revenue in perfect competition. The market output where price equals marginal cost is the level the level of output where the sum of consumer and producer surplus is maximized.

The free entry and exit assumption insures economic profits are zero in the long-run and more importantly, resources are perfectly mobile in response to a change in demand or supply conditions.

If demand for a good increases, for example, firms will experience short-run profits, which will induce an expansion of the industry. The increased supply lowers price until profits are zero for the typical supplier.

Therefore, we can conclude that the correct option is C.

Your question is incomplete, but most probably your full question was:

In the theory of perfect competition, the assumption of easy entry into and exit from the market implies

a. positive economic profits in the long run.

b. losses in the long-run equilibrium.

c. zero economic profits in the long run.

d. zero economic profits in both the short run and the long run.

e. positive economic profits in both the short run and the long run.

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3 0
2 years ago
Additional fees that are paid when finalizing a home purchase are also known as _____.
Effectus [21]
The answer is "closing cost", because if you're at the end of buying your house then its called a "closing cost".
7 0
3 years ago
Read 2 more answers
A town passes a zoning ordinance preserving the architectural style of an area and requiring plantings in the parking strips. Th
Iteru [2.4K]

By trying to preserve the architectural style of the area and the paintings, this is an example of Aesthetic zoning

<u>What is Aesthetic zoning?</u>

Tis is a type of zoning that is made to conform with architectural landscapes. The aim of this type of zoning is for the preservation of the aesthetics of the community.

This type of zoning is mostly done in those residential areas that are planned.

Read more on Aesthetic zoning here:

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8 0
2 years ago
A landowner owned a large piece of property containing an inn and a bakery. She entered into a contract to sell the property to
pickupchik [31]

Answer:

The most likely result at trial is that the landowner's claim for specific performance will be successful, and she will be awarded the entire price of contract.

Explanation:

When there isn't a statute, the buyer bears the risk of loss when property subject to a contract for sale is destroyed without fault of any party prior to the date specified for closing. Unless the contract specifies otherwise, the buyer must pay the contract price even if the property is damaged by fire.

The inn was burned down in this case after the landowner and the buyer signed a contract for the sale of the property, but before the closing date. The contract appears to be silent on the risk of loss, and no appropriate statute exists. As a result of the common law rule, the buyer bears the risk of loss. Therefore, the landowner has the right to particular execution of the contract, which implies that the entire stipulated contract price must be paid by the buyer.

Regardless of the property's drop in worth owing to the fire, the $1 million contract price must be paid by the buyer because he bears the risk of loss.

Therefore, the most likely result at trial is that the landowner's claim for specific performance will be successful, and she will be awarded the entire price of contract.

6 0
2 years ago
A factory building is an example of which factor of production?
Luba_88 [7]

Answer:

The making and delivery of the product.

Explanation:

Because in a factory it manufactures the product that they are making and send them to stores to sell the products for money.

5 0
3 years ago
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