Agricultural products is the answer
Answer:
d. Provides a guarantee of payment from the buyer, reducing the credit risk to the seller
Explanation:
A letter of credit is a document that guarantees a seller of payment from the buyer. It is drafted and issued by a bank assuring the seller of timely and full payment. A letter of credit is applied mostly in international trade where the buyer and seller hardly meet or know each other.
Banks issue a letter a credit against cash or other securities. Should the buyers fail to make payment, a letter of credit assures the seller that the bank will take responsibility for the payment. Banks usually charge a fee for issuing letters of credit.
Answer:
a. The portfolio weights that remove all risk is 50%
.
b. The risk-free rate of interest in this economy is 13.5%
Explanation:
The formula for standard deviation of a portfolio, of which i cannot type:
a. If we let sigma p = std. deviation of portfolio
rho 1,2 = correlation
if sigma = 0 and rho = -1, then the first equation can be re-written as :
0 = w1^2 * s1^2 + w2^2 * s2^2 + 2 * w1 * w2 * s1 * s2 * -1
0 = (w1s1 - w2s2)^2
w1s1 = w2s2
w1 * 0.03 = w2 * 0.03
w1 = w2 = 50%
Therefore, The portfolio weights that remove all risk is 50%
.
b. Expected return of the portfolio = 0.5*20% + 0.5*7%
= 13.5%
This portfolio has zero risk, risk free rate = 13.5%
Therefore, The risk-free rate of interest in this economy is 13.5%
Answer:
Points
Explanation:
Mortgage points or discount points are prepaid interest available when obtaining a mortgage.
When a lender charges the borrower points he is in effect increasing the yield on the loan above the interest rate agreed on the loan.
Borrowers can also offer points to the lender to obtain a reduced interest rate and reduced monthly payment in exchange for upfront payment of points.
C.rent,renters insurance,transportation costs
