Answer:
The potential of additional regional currencies such as the euro is very important, and for this reason, many economists support the idea. In fact, John Maynard Keynes, one of the most influential economists in history, once proposed not a regional common currency, but a common global currency.
The potential lies in the fact that regional currencies allow to coordinate a common monetary policy in several countries. This common policy means that several countries now have the same interest rates, the same rate of inflation, and the same currency itself, and all these commonalities facilitate the exchange of goods and services.
While the Euro has had drawbacks since its inception, the Euro has survived, and is now one of the strongest curriencies in the world.
If you support the concept, should those currencies be tied to regional economic blocs?
I support the concept, and I agree that they should be tied to regional economic bloc. It would not be very effective to adopt a common currency for countries that are not economically integrated in other areas.
A company that exists on different locations around the world I think.
Answer:
None of the options are correct as the price today will be $26.786
Explanation:
The price of a stock whose dividends are expected to grow at a constant rate forever can be calculated using the constant growth model of the dividend discount model approach (DDM). The DDM bases the value of a stock on the present value of the future expected dividends from the stock.
The formula for price under constant growth model is,
P0 = D1 / (r - g)
Where,
- D1 is the dividend expected for the next period
- r is the required rate of return or cost of equity
- g is the growth rate in dividends
However, as the constant growth rate in dividends is to be applied from Year 2 onwards, we will use the D2 to calculate the price at Year 1 and we will then discount this further for one year to calculate the price today.
P1 or Year1 price = 2 * (1+0.05) / (0.12 - 0.05)
P1 or Year 1 price = $30
The price of the stock today or P0 will be,
P0 = 30 / (1+0.12)
P0 = $26.786
Answer:
True.
Explanation:
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