Answer: 12.6%
Explanation:
The bank's expected standard deviation after adding this branch will be calculated thus:
= (Total invested in new branch × Expected rate of return) + (1 - Investment in new branch) × Other assets
= (0.2 × 0.15) + (1 - 0.2) × 0.12
= 0.03 + 0.8 × 0.12
= 0.03 + 0.096
= 0.126
= 12.6%
Therefore, the bank's expected standard deviation after adding this branch is 12.6%.
A and C is correct
Explanation:
According to the expectations theory of the term structure :
- The yield curves should also decrease as the slope upward.
- Short-term prices are expected to stay fairly stable in forward whenever the return curve is sharply increasing.
Theory of expectations is focused on investors ' confidence in forward prices as future contracts represent (and some might argue predict) potential short-term interest rates.
Investors in two recent 1-year bond transactions and investing in a single two-year bond today show the same level of value.
Answer:
C
Explanation:
First let calculate the stock intrinsic value to see whether is stock is overvalued or undervalued based on current market price. The stock can be valued using dividend discounted model (DDM). The DDM is stated as below:
Stock value = Next year dividend/(required rate of return - long-term growth)
= 4.00/(12% - 5%) = 57.14
The stock intrinsic value is higher than current market price so it is undervalued now. Correct answer is option C
Answer:
A) a non-binding price floor
Explanation:
A non-binding price floor is a price floor set below the current equilibrium price, so it really doesn't affect either the supply or demand of the product.
A binding price ceiling will result in a shortage since it decreases quantity supplied and increases quantity demanded. Rent control is a type of binding price ceiling. A minimum wage is a type of binding price floor which results in labor supply surplus since the quantity of labor supplied will increase but the quantity of labor demanded will decrease.
