Answer:
<h2>Basically,an increase in the price of the main component used in drum head production will lead to a decrease in the overall supply of drum head and an increase in the equilibrium price of drum heads in the market,everything else held constant.</h2>
Explanation:
- An increase in the price of the main component used in drum head production by 9% implies an increase in the overall cost or expense of producing drum heads by the drum head producers or firms.
- Hence,a price increase of the main component used to make drum heads will lead to a decrease in the total or overall supply of drum heads in the market,illustrated by a leftward or upward shift of the market supply curve of drum heads in the graphical model of drum heads market.
- Now,as the market supply curve for drum heads shift rightward or upward,the equilibrium price of drum head in the market will increase,as the market supply of heads have decreased with no change in the market demand of drum heads and everything else being held constant.
Answer:
1. Current bonds price = $81.86.
2. Yield to maturity = 22.16%.
3. 3. Expected Return = 7.5%.
Explanation:
Required Rate = Rf + beta*MRP
= 5% + 0.25*(15% - 5%)
= 5% +0.25*10%
= 5% + 2.5% = 7.5%
Required Rate = 7.5%
Expected Future Value = 70% x $100 + 30% x $60
= (0.7*$100) + (0.3*$60)
= $(70+18) = $88
Expected Future Value = $88
1. Current bonds price = 88/1.075 = $81.86
2. Yield to maturity = 100/81.86 - 1 = 1.22159785-1 = 0.22159785 = 22.159785% = 22.16%
3. Expected Return = 7.5%
The equilibrium interest rate is 5 percent, the equilibrium quantity of loanable funds is increased to $250 billion and the government has a budget $100 billion.
Explanation:
The government enters the market when it has a surplus. The tendency of government budget is to rise the real interest rate and decrease investment. The private supply of the loanable funds will increase to match the quantity of loanable funds based on the government demand.
when the Government surplus is for $100 billion a year, the equilibrium interest rate falls to 5 percent and the equilibrium quantity of loanable funds increases to $250 billion a year.
Thus, The SLF curve is the supply of loanable funds curve and the PSLF curve is the private supply of loanable funds curve. The equilibrium interest rate is increased to 5 percent, the equilibrium quantity of loanable funds is $ 250 billion and the government has a budget of $100 bilion.
<u>Answer:</u>Option C
<u>Explanation:</u>
Dividend means the portion of profit which the company plans to distribute it to the shareholders of the company. When there is a dividend increase it signals that the company will have future positive results. The dividend increase is a forecast of the company's future profitability.
The shareholders will also know that company will have positive performance in the future. The information is useful for the investors as this also indicate a positive cash flow in the company's financial statements.
