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NISA [10]
3 years ago
5

If investors expect inflation to increase over the next 20 years and the maturity risk premium is expected to increase over the

next 5 years. What would the general yield curve look like? Assume all other factors that impact interest are expected to be determinate (i.e. not change).
Business
1 answer:
olganol [36]3 years ago
5 0

Answer: normal /upward sloping

Explanation:

The yield curve is a curve that shows the relationship that exist between interest rate and time to maturity. According to the expectation theory, it is stated that the yield curve will be upward sloping when there's increase in inflationary expectations.

The slope of the yield curve helps in giving a clue to know the direction of future interest rates. It should be noted that an upward sloping curve means that there is an expectation of higher interest rates in the future.

Therefore, when investors expect inflation to increase over the next 20 years and the maturity risk premium to increase over the next 5 years, the general yield curve will be upward sloping.

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If Country A is an agricultural country and Country B has many cities and factories, it would make sense for
soldi70 [24.7K]

Answer:

Country A to specialize in growing corn while country B specializes in making cars

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When faced with a conflict, police officers should?
mihalych1998 [28]
<span>Policy officers should try to de-escalate the situation to avoid violence whenever possible. Therefore, officers should avoid aggressive approaches or intimidation and should instead be non-confrontations. Physical force should be reserved as an absolute last resort.</span>
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3 years ago
Read 2 more answers
5 Make versus buy, activity-based costing. The Svenson Corporation manufactures cellular modems. It manufactures its own cellula
zmey [24]

Answer:

See below

Explanation:

Expected manufacturing costs 2018:

Direct materials $170 × 10,000 = $1,700,000

Direct labor $45 per unit × 10,000 = $450,000

Variable overhead per batch 1,500 × 80 = $120,000

Fixed overhead:

Avoidable $320,000

Not avoidable $800,000

1. Calculate that total expected manufacturing cost per unit of making CMCBs in 2018

= $1,700,000 + $450,000 + $120,000 + $320,000 + $800,000

= $3,390,000

Cost per unit = $3,390,000/10,000 units

= $339 per unit

2. Svenson should keep manufacturing the CMCBs

Costs if CMCBs are purchased from Minton = ($300 × 10,000) + $800,000

= $3,000,000 + $800,000

= $3,800,000

It means that the cost of purchasing is $410,000 [ $3,390,000 - $3,800,000] higher than the cost of manufacturing.

5 0
2 years ago
All of the following costs are likely to decrease as a result of better quality except:
swat32

Answer:

The correct answer is (d)

Explanation:

Better quality can help to reduce many costs such as customer’s dissatisfaction cost, inspection cost and warrant and service cost. When customers don't like the quality of the product they are likely to buy the same product from somewhere else that is the dissatisfaction cost. Still, maintenance cost is likely to incur no matter how good the quality is. Maintenance cost helps to keep the product clean and fresh for long-term use.

5 0
3 years ago
Firms in the patented pharmaceutical industry earned an average return on net worth of 22 percent in 2006, compared with an aver
IrinaVladis [17]

Answer and Explanation:

The following theories of profit best explain the profits of pharma companies:

1. Risk bearing - The theory says the higher the risk, the higher the rewards. The pharma companies take huge risks in inventing a new drug, having trials and the getting FDA approvals.

2. Monopoly - If a new drug is approved, the pharma company gets a patent over it, which means that it will have an effective monopoly on that segment of the market.

3. Innovation - it states that innovation is what keeps a company ahead. And pharma industry is built on innovation. Pharma companies have to continuously find new drugs because once patents run out on existing drugs, there are no profits to be made.

3 0
3 years ago
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