Answer:A) one year
Explanation: The unbiased expectations theory, also known as the expectation theory aims to estimate how much the short term interest rates will amount to in future. This is based on long term interest rates. Forward rates are used to predict the value of interests in the future based on the values calculated today. A maturity of 1 year has the lowest interest rate because it is not given enough time to grow. Interest rates tend to grow better over a longer period of time. Therefore in terms of expectation theory the longer the maturity the better the chances of interest rate growth.
Answer: d. 3.82%
Explanation:
ROE = Net Income / Equity so Equity need to be ascertained.
1.75 = Total Assets/ Total Equity
Total Equity = Total Assets/ 1.75
1.33 = Revenue / Total Assets
Total Assets = Revenue / 1.33
= 320,000/1.33
= $240,601.50
Total Equity = 240,601.50/1.75
= $137,486.57
Old ROE = 10,549/ 137,489.57
= 0.07672582
= 7.67%
New ROE = (10,549 + 5,250) / 137,489.57
= 0.11491053466
= 11.49%
Difference = 11.49 - 7.67
= 3.82%
Answer:
A price floor set above the equilibrium price will result in a surplus of supply.
Explanation.
An equilibrium price refers to the price at which demand for a service or product is equivalent to the quantity of the product or service supplied in the market.
Setting a price floor above the equilibrium price essentially means that the set prices will be higher than what demand is willing to pay for the product or service. Demand will therefore purchase fewer quantity of the product offered by supply at the prevailing price than they would have at equilibrium price.
Since the price floor will raise the product price to considerably higher than the equilibrium price, supply will be willing to provide higher volumes of the product at the prevailing price than at equilibrium price.
This will lead to a mismatch in the market between supply and demand resulting into a surplus.
