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Pani-rosa [81]
2 years ago
12

1. What is the relationship between forward rates and the market’s expectation of future short rates? Explain in the context of

both the expectations hypothesis and the liquidity preference theory of the term structure of interest rates.
Business
1 answer:
Dvinal [7]2 years ago
6 0

Through the expectations hypothesis and the liquidity preference theory of the term structure of interest rates, liquidity must be zero for the forward rate to be equal to the expectations of future short rates.

<h3 /><h3>What is expectation theory?</h3>

Corresponds to a forecast of short-term interest rates by analyzing them against current long-term interest rates.

Therefore, it is a theory used to assist in better understanding and forecasting short-term securities trading in the future.

Find out more about expectation theory here:

brainly.com/question/20630240

#SPJ1

You might be interested in
Financial Statements from the End-of-Period Spreadsheet
alexdok [17]

Answer: See explanation

Explanation:

Triton Consulting Income Statement For the Year Ended April 30, 20Y3:

Fees earned 279000

Less: Expenses:

Salary expenses = 242000

Supplies expenses 1650

Depreciation expense. 900

Miscellaneous expenses 2000

Total expense = 246550

Net income 32450

Triton Consulting Balance Sheet April 30, 20Y3

Assets

Current assets

Cash 21500

Account receivable 51150

Supplies 750

Total current asset = 73400

Property, plant and equipments

Office equipment 32000

Accumulated Depreciation 5400

Total property,plant and equipment = 26600

Total asset = 100,000

Liabilities

Current liabilities:

Account payable: 3350

Salary payable: 2000

Total liabilities = 5350

Stockholders equity

Common stock 20000

Retained earnings 74650

Total stockholders equity = 94650

Total liability and stockholders equity = 100,000

5 0
3 years ago
Which of the following statements is true of the behavior of total variable​ costs, within the relevant​ range? A. They will inc
grandymaker [24]

Answer:

They will decrease as production decreases

Explanation:

Total Variable cost is sum of all the cost incurred in production of total units of goods produced. It is directly proportional to the number of units of goods produced. It helps to analyze cost structure of goods and then decide on pricing strategy of the goods. Some of the examples of variable cost can be packaging cost, raw material’s cost.

Mathematically it can be defined as  

Total variable cost = Total units of goods produced *  variable cost for one unit of good produced  

Hence from the given option  They will decrease as production decreases as the number of units of goods produced will decrease and hence lesser raw material and packaging will be required to produce the goods.

7 0
3 years ago
A country produces only bananas and robots. If it produced only bananas with all its available resources, it could make 60 milli
Levart [38]

It should be noted that in the PPC, the downward sloping line 'ab' is the production possibility curve.

<h3>How to illustrate the information?</h3>

In the diagram, since point 'A' falls on the PPC itself, it represents the full employment of resources. Point 'A' represents the combination of 30 million bananas and 10 million robots.

Opportunity cost producing a robot = Total bananas possible / Total robots possible

Opportunity cost producing a robot =60/20

Opportunity cost producing a robot = 3 bananas

The area outside PPC represents the unattainable combinations of two goods.

During the recession, the resources are inefficiently used and the production combination is represented by point 'B' which falls below PPC When the production technology improves only for one good and not for the other, the PPC rotates

Marginal opportunity cost of a robot = 80 million bananas / 10 million robots

The marginal opportunity cost of a robot = 8 bananas

Opportunity cost of 2 million robots = 8 bananas × 2 million

The opportunity cost of 2 million robots will be 16 million bananas.

Learn more about PPC on:

brainly.com/question/2617319

#SPJ1

8 0
2 years ago
The Rule of 72 is: a. A tool to determine the number of years until retirement for an employee b. Used to estimate how fast pric
Veseljchak [2.6K]

Answer:

b. Used to estimate how fast prices will double using a given annual inflation rate

Explanation:

Rule of 72 is a fast statistical method to determine how long an investment will double given annual interest rate.

Simply divide 72 by the annual interest rate.

Alternatively it can be used to calculated annual rate of return required to double investment.

Alternatively it can be used to calculate annual rate of return required to double an investment.

For example if $1,000 is to be doubled in 5 years.

Years to double= 72/ Interest

Interest= 72/5= 14.4%

5 0
3 years ago
What is organization?<br>​
dezoksy [38]
An organized group of people with a particular purpose, such as a business or government department.
7 0
2 years ago
Read 2 more answers
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