Answer:
False
Explanation:
If the quantity of financial capital supplied is equal to the quantity of financial capital demanded then, the national savings and investment identity is written as S + (M - X) = I + (G - T)
Where S = Private sector saving.
I= Private sector investment.
G= Government spending.
T=Government income, i.e. tax.
X =Exports.
M=Imports.
Answer:
Return on equity(r) = 0.16
Plowback ratio(b) = 50 = 0.5
Earnings per share(EPS) = $2
D1 = 50% x $2 = $1
Cost of equity(Ke) = 0.12
Growth rate(g) = b x r
= 0.5 x 0.16
= 0.08 = 8%
Current market price(Po) = D1/Po + g
= $1/0.12 - 0.08
= $25
Market price in 3 years = Po(1+g)n
= $25(1+0.08)3
= $25(1.08)3
= $31.49
Explanation:
In this case, we need to calculate growth rate by multiplying the plowback ratio by return on equity. Then, we will calculate the current market price as shown above. Thereafter, we will subject the current market price to a 3-year growth rate to calculate the market price in 3 year's time
Short run speculation in currencies can create a self fulfilling prophecy, at least for a time, where an expected appreciation leads to a stronger currency and vice versa.
<u>Explanation:</u>
The currency of a country can either appreciate or it can depreciate. If the currency of a country appreciates, it means that it has gone stronger in the currency market.
But if the currency of the country depreciates, then the currency has gone weaker in the market of the currency. With the appreciation of the currency, the imports for that country increases but it's exports decreases because it becomes expensive for other countries.
