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Nataliya [291]
3 years ago
14

Assume that securitization combined with borrowing and irrational exuberance in Hyperville have driven up the value of existing

financial securities at a geometric rate, specifically from $4 to $8 to $16 to $32 to $64 to $128 over a six-year time period. Over the same period, the value of the assets underlying the securities rose at an arithmetic rate from $4 to $6 to $8 to $10 to $12 to $14.
Rquired:
1. If these patterns hold for decreases as well as for increases, by how much would the value of the financial securities decline if the value of the underlying asset suddenly and unexpectedly fell by $6?
Business
1 answer:
Mashcka [7]3 years ago
6 0

Answer:

The financial securities would decline by $106.7

Explanation:

Given

Financial securities at a geometric rate= $128

Underlying Security Asset = $14

Decreased value of the underlying asset = $6

When there's a reduction of $6 in the underlying asset price, this means the securities value will also get a reduction by a ratio of 6.

Because of this, we'll only consider the financial securities because it increases at a geometric progression unlike underlying assets that increases by arithmetic progression.

First, the value of financial securities needs to be calculated using the following formula;.

Value of Financial Securities = Financial securities at a geometric rate ÷

Decreased value of the underlying asset

Value of Financial Securities = $128 ÷ 6

Value of Financial Securities = $21.3

Tthe decline value of the financial securities is calculated as follows:

Decline Value = Financial securities at a geometric rate - Value of Financial Securities

Decline Value = $128 - $21.3

Decline Value = $106.7

Hence, the financial securities would decline by $106.7

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Answer:

A, supplementary

Explanation:

A supplementary service can be said to be an added service to an original service package.

That is, a supplementary service can be said to be an extra service or services that is embedded in a whole service.

For example, when you go to a tech store to have your hard drive replaced, a supplementary service such as general cleaning and routine check of your computer is included in the hard drive replacement service.

The main or core service is hard drive replacement while the supplementary service includes cleaning and routine check of other computer components.

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Free_Kalibri [48]

Answer:

The correct answer is: in all decision making.

Explanation:

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Almost all the decision we make is based on cost-benefit analysis. It used by households and individuals for utility maximization. It is used by businesses for profit maximization and is used by policy makers for welfare maximization.

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3 years ago
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Answer:

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