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AURORKA [14]
4 years ago
14

A one-year bond has an interest rate of 5% today. Investors expect that in one year, a one-year bond will have an interest rate

equal to 7%. Investors expect that in two years, a one-year bond will have an interest rate equal to 9%. According to the expectations theory of the term structure of interest rates, in equilibrium, a three-year bond today will have an interest rate equal to
Business
2 answers:
Amanda [17]4 years ago
3 0

Answer:

6%

Explanation:

Current interest rate on one year bond = 5%

Forward interest rate on one year bond = 7%

To Calculate the interest rate on two year bond we use this:

Interest rate = [Current interest rate on one year bond + Forward interest rate on one year bond]/2

Interest rate = [5 + 7]/2 = 12/2 = 6%

Therefore,

The interest rate on two-year bond is equal to 6%.

anygoal [31]4 years ago
3 0

Answer:

A one-year bond has an interest rate of 5% today. Investors expect that in one year, a one-year bond will have an interest rate equal to 7%. Investors expect that in two years, a one-year bond will have an interest rate equal to 9%. According to the expectations theory of the term structure of interest rates, in equilibrium, a three-year bond today will have an interest rate equal to 7%.

Explanation:

The current interest rate on one year bond = 5%

The forward interest rate on one year bond = 7%

The forward interest rate on one year bond = 9%

We can now calculate the interest rate on a three-year bond as below:

Interest rate = [Current interest rate on one year bond + Forward interest rate (7%) on one year bond + Forward interest rate (9%) ]/3

Interest rate = [5 +7+9]/3 = 21/3 = 7%

Therefore,

The interest rate on a three-year bond is equal to 7%.

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Siren Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2020, the company incurred
Naddik [55]

Answer:

Part A.

$16.75

Part B.

Variable costing income statement for 2017

Fi

Part C.

Part D.

Absorption costing income statement for 2017

Explanation:

<em>The question is incomplete, however see explanations below</em>

Cost per unit - Variable Costing

<em>Only consider the Variable Manufacturing Costs</em>

Cost per unit - Variable Costing = $16.75

Cost per unit - Absorption Costing  

<em>Consider Both Variable and Fixed Manufacturing Costs</em>

7 0
3 years ago
If the actual terms of trade are 1 belt for 1.5 swords and 70 belts are traded, how many belts will Morocco gain compared to the
motikmotik

Answer:

If Morocco produces 120 belts and exports 70 belts:

  • it will receive 105 swords (= 70 x 1.5)
  • it will consume 50 belts (its domestic consumption of belts will decrease by 10)

Explanation:

Without trade, Morocco will produce 60 swords and 60 belts and consume them all, but if it engages in trade, it will produce 120 belts.

  • Morocco's opportunity cost of producing one belt = 60 / 60 = <u>1</u>
  • Morocco's opportunity cost of producing one sword = 60 / 60 = 1

  • Estonia's opportunity cost of producing one belt = 100 / 40 = 2.5
  • Estonia's opportunity cost of producing one sword = 40 / 100 = <u>0.25</u>

If Morocco produces 120 belts and keeps current consumption level:

  • it consumes 60 belts
  • it can trade 40 belts for 60 swords
  • it will have a 20 belt surplus production

If Morocco produces 120 belts and exports 70 belts:

  • it will receive 105 swords (= 70 x 1.5)
  • it will consume 50 belts

6 0
4 years ago
Personal possession of currency is prohibited in U.S. prisons, although, in practice, prisoners still exchange goods and service
Viktor [21]

Answer:

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7 0
3 years ago
Ron is interested at working at Gas’N’Go, but whenever he looks on their company Web site he doesn’t see any openings listed. Wh
Brrunno [24]

Answer: c). Ron should send a prospecting letter to see if there are any unadvertised openings

Explanation: Since Ron is interested at working at Gas’N’Go, but is unable to find an opening on the company Web site he should try and send a prospecting letter to see if there are any unadvertised openings. It might happen at times that companies do not post online for certain positions. but when Ron send a letter he might have a chance to get a call from them.

4 0
4 years ago
Read 2 more answers
Since much innovation arises from experimentation and improvisation, the _____ organization structure is typically considered be
evablogger [386]

Answer:

<u>Organic.</u>

Explanation:

An organic organizational structure has emerged from a current need for companies to quickly adapt to market changes and optimize processes. Which is justified by the great competition of the market and its instability.

This structural model is characterized by greater flexibility rather than rigidity, as decisions are decentralized and there is greater interaction between the functional areas of the organization. The benefits of this organic structural model are mainly the possibility of innovation and adaptation to changes, the hierarchical flexibility that generates greater interaction between employees and motivation to contribute with solutions to possible problems.

But like every structural model, there are also the negatives, which can be justified by the emphasis on relationships, which can cause inefficiency at some point, as concern for human needs can be taken into account more than concern for technical efficiency, which is a relevant challenge for companies with an organic structure.

3 0
4 years ago
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