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3 years ago

True or False:

Business

1 answer:

rusak2 [61]3 years ago

4 0

Answer:

Check the explanation

Explanation:

Efficient market theory states that the security price reflects all the available information of the market. It means there is no reason to believe that prices are incorrect.

Thus, the given statement is false.

The past data is not useful for decision making. Information of past trends may not help the investor to earn abnormal returns.

The statement is consistent with weak form efficiency as current price reflects the past price movements.

Thus, the statement belongs to weak form efficiency.

The stock price will increase and settle at a new equilibrium level.

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<h3><u>Explanation:</u></h3>

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3 years ago

How can a poor housing market put home buyers in a financially unstable position?

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<span>Poor housing market put home buyers in a financially unstable position because when the home value decreases, property taxes and insurance costs increases. Though the amount of the housing is at low cost, taxes and insurance companies get competitive and demanding resulting to inflation over the years.</span>

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3 years ago

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Levered, Inc., and Unlevered, Inc., are identical in every way except their capital structures. Each company expects to earn $18

Fantom [35]

Answer:

Levered, Inc. and Unlevered, Inc.

Equity shares in the Levered, Inc. represents a better value.

Explanation:

a) Data and Calculations:

Levered, Inc. Unlevered, Inc.

Debts at 8% 65 million $0

Outstanding shares 1.9 million 3.8 million

Market price per share $98 $71

Equity value $186.2 million $269.8 million

Expected EBIT $18 million $18 million

Interest ($65 million * 8%) $5.2 million $0

Net income $12.8 million $18 million

Earnings per share $6.74 $4.74

Dividends per share $6.74 $4.74

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3 years ago

Dimitri has several apple trees in his yard, and apples are a perfectly competitive market with a price of $2 per pound. if dimi

Alinara [238K]

The total revenue and the marginal revenue when he sells the 100th pound of apples is
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So the answer is the total revenue of Dimitri is $200 while the marginal revenue is $2.

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3 years ago

Desired consumption is Cd = 100 + 0.8Y - 500r - 0.5G, and desired investment is Id = 100 - 500r. Real money demand is Md/P = Y -

allochka39001 [22]

Answer:

Under a) r=0.1;Id=50;Cd=750;P=7 b) P only changes and is now 9.33

Explanation:

a) In a closed economy national savings are equal to investments or:

S d = I d = Y - Cd - G

Id = Y - 100 - 0.8*Y + 500*r - 0.5*G

100 - 500*r = 0.2*Y -100 + 500*r -0.5*G

200 - 1000*r = 0.2*1000 - 0.5*200=100

-1000*r=-100

r= 0.1

i = 0.15

Id = 100 -50 =50

Cd= 100 + 800 - 50 - 100=750

P = Md/Y-2000 i

P= 2100/1000 -300=7

b) If money supply increases to 2800, the price level would be:

P = 2800/Y - 2000*i = 2800/Y- 2000*(i-inflation)

However, since the variables determining real interest rate remained the same, r is also the same or 0.1 and i is 0.15. Consumption and investment remain the same, only price level changes or:

P=9.33

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