Answer:
because In the long run, real GDP tends to potential output.
Explanation:
Since actual GDP continues to increase economic output in the longer term, the seasonally adjusted annual budget balance is a better predictor of public policies ' long-term sustainability. ... Economic GDP dropped in recessions.
This means that incomes for consumers, business investment and profits for producers also fall.
The cyclically adjusted expenditure balance plays an important role in the EU budgetary framework, which still provides a better picture of fiscal policy focus.
Answer: <em>c. The required returns on all stocks have fallen, but the fall has been greater for stocks with higher betas.</em>
Explanation:
The Capital Asset Pricing Model formula can be applied to this question.
The formula is,
Er = rF + b( rM - rF)
Where
Er is the required return
rF is the risk free rate
b is beta
rM - rF is the market premium.
Now looking at that formula, you can tell that if market premium falls, the required return would fall as well.
However, for stocks with larger betas, they would drop more spectacularly because they would be coming from higher values to lower.
Take a stock with beta 4 vs one with beta 5 for instance.
Assume that Market premium went from 6% to 3% and a risk free rate of 3%.
<u>Beta 5 stock </u>
When market premium is 6,
= 3% + 5 (6%)
= 33%
When market premium is 3,
= 3% + 5(3%)
= 18%
<u>Beta 4 stock </u>
When market premium is 6
= 3% + 4 (6%)
= 27%
When market premium is 3
= 3% + 4 (3%)
= 15%
Notice how the stock with beta 5 fell by 15% while the stock with beta 4 fell by 12%.
Answer:
a. continue only if Eleni and Frey consent
Explanation:
A General Partner within a limited partnership organization manages the business and has unlimited personal liability for the debts and obligations of that firm/organization. Therefore if there are more than one then all decisions must be made in unison because it affects each member personally. So in this scenario if Derry Dies the partnership can continue only if Eleni and Frey both consent.
Answer: $49.05
Explanation:
The call was purchased at $3.05 and the strike price at expiration is $46. The total expenses at expiration is:
= 46 + 3.05
= $49.05
To make a profit, the stock price will have to be above $49.05 which makes it the breakeven point.
<em>Option not included. </em>
<u>Full question:</u>
You know that firm XYZ is very poorly run. On a scale of 1 (worst) to 10 (best), you would give it a score of 3. The market consensus evaluation is that the management score is only 2. Should you buy or sell the stock?
A. Buy
B. Sell
<u>Answer:</u>
Buy the stock
<u>Explanation:</u>
At any position in time, the stock price displays all candidly accessible erudition about the company. This implies that an investor can obtain abnormal returns only if that investor holds private erudition about the firm's forecasts.
The firm's administration is not as critical as everyone else considers it to be, hence, the firm is underestimated by the market. You are scarcely hopeless about the firm's probabilities than the assumptions constructed into the stock price. As the administration of the firm is not as weak as anticipated to be. So the investor will determine to buy the stocks of the firm.