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3 years ago

Assume the Expectations Hypothesis regarding the term structure of interest rates is correct.

Business

1 answer:

S_A_V [24]3 years ago

6 0

Answer:

2.5% is the current two years interest rate

Explanation:

If the first year interest rate is 2% and expected coming year interest rate is 3% based on the hypothetical projection which is believed to be correct, then the interests rate for the two years will be the average of the interest of the two years in focus which gives us:

Current IR = IR (yr 1) + IR (yr 2) / no of years

Current IR = 2 + 3 / 2 = 2.5

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Answer:

$1 par value

Explanation:

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True or false: if society wishes to reduce overall pollution by a certain amount, it is efficient to have firms with highest pro

AveGali [126]

TRUE

If the society wishes to reduce overall pollution by certain amount, it is efficient to have firms with highest profit bearing the largest burden of reducing pollution and firms with lowest profit bearing the least burden. This is because it will not lead to overall burden on the small firms. If large firms and small firms were to reduce the pollution burden on same rate then it will be very costly for the smaller firms to bear that and it will be a burden of cost on smaller firms.

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3 years ago

The total market value of the equity of ITM is $6 million, and the total value of its debt is $4

timofeeve [1]

Answer:

a. The required rate of return on Okefenokee stock is 16%.

b. WACC = 10.56%.

c. Estimate the discount rate for an expansion of the company's present business.

It should be the same as the WACC = 10.56%

d. The required rate of return on Okefenokee's new venture is Ke = 18 %.

Explanation:

Here the given is,

E = $6 million, D = $4 million, Beta = 1.2,

Rmp = the expected risk premium on the market =10%.

Rf = The Treasury bill rate = 4%

a. The required rate of return on Okefenokee stock,

$Ke = Rf + Beta \times Rmp = 4 + 1.2 \times 10 = 16%$ %.

b. Tax rate, T = 40%

The proportion of debt = $Wd = D / (D + E) = 4 / (6 + 4) = 0.4$

Proportion of equity, We = 1 - Wd = 1 - 0.4 = 0.6

Cost of debt, Kd = Risk-free rate as debt is free of default = 4%

$WACC = Wd \times Kd \times (1 - T) + We\times Ke\\\\ = 0.4 \times4\times (1 - 40) + 0.6 \times 16\\\\ = 10.56%$

WACC = 10.56%.

c. Estimate the discount rate for an expansion of the company's present business.

It should be the same as the WACC = 10.56%

d. Suppose the company wants to diversify into the manufacture of rose-colored glasses. The beta of optical manufacturers with no debt outstanding is 1.4. What is the required rate of return on Okefenokee's new venture? (You should assume that the risky project will not enable the firm to issue an additional debt)

$Ke = Rf + Beta \times Rmp\\\\Ke = 4 + 1.4 \times 10 = 18%$

Ke = 18 %.

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3 years ago

how do you know a selection device is valid? what are the possible consequences of using invalid selection methods? how can an o

solniwko [45]

Poor quality and unsuitable candidates will frequently be hired as a result of an ineffective staff selection process. If it is unreliable, it will make the<u> negative effects</u> worse and ultimately kill the organization.

<h3>Define the term invalid selection methods?</h3>

Validity is a gauge of how effective a particular strategy is. A selection procedure is legitimate if it increases your chances of selecting the best candidate for the position.

It is feasible to evaluate recruiting choices based on desired results like a quick pick-up time, low attendance, or a solid safety record.
Finding a new hire who is most fit for the position at hand is the process of employee selection, sometimes referred to as applicant selection.
The steps in the hiring process are determined by the position for which you are hiring, your budget for recruiting, the seniority of the post, the resources at your disposal, and your organizational requirements.

However, the majority of organization have a secret goal in mind when hiring new personnel. These qualities might not be present in these selecting processes.

To know more about the selection methods, here

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