Answer:
If a company increases its final goods inventory level, that will increase the country's GDP even if the goods are not sold during the current period (they will be sold in future periods). Increases in inventory level are considered part of Investment component of the GDP.
If the inventories are not sold during the year (2018) and if they continue to be unsold during part of 2019, that will negatively affect the GDP because fewer goods will be purchased to replenish these inventories and the market price of the goods will also decrease. The market price of goods is determined by the supply and demand. If the supply is much higher than the demand and inventories start to pile up, their price will decrease in order to increase the quantity demanded. If the volume of the goods in inventory is significant enough, this should lower the inflation rate.
Answer:
1.
r market = 0.12 or 12%
2.
r stock = 0.12 or 12%
3.
r Stock = 0.169 or 16.9%
Explanation:
The required rate of return can be calculated using the CAPM or Capital asset pricing model equation. The formula for required rate of return under this model is,
r = rRF + Beta * rpM
Where,
- rRF is the risk free rate
- rpM is the risk premium on market
- r represents the required rate of return
1.
The beta of the market is always considered to be 1. Thus, the required rate of return on market would be,
r market = 0.05 + 1 * 0.07
r market = 0.12 or 12%
2.
For a stock whose beta is 1.0, the required rate of return would be same as that for market. So, the required rate of return for a stock with a beta of 1.0 is,
r Stock = 0.05 + 1 * 0.07
r Stock = 0.12 or 12%
3.
The required rate of return for a stock with a beta of 1.7 is,
r Stock = 0.05 + 1.7 * 0.07
r Stock = 0.169 or 16.9%
Economic stimulus Answer:
Explanation:
Answer:
Recession cause standard monetary and fiscal effects.
Explanation:
Recession impact all kinds of business, large and small,due to tightening credit conditions, slower, demand, and general fear and uncertainty.
