Answer:
Crash-n-Burn Computers
a. The average real return on Crash-n-Burn's stock is:
= 8.3%
b. The average nominal risk premium on Crash-n-Burn's stock is:
= 6.8%
Explanation:
a) Data and Calculations:
Average inflation rate = 1.5%
Average T-bill rate = 3%
Returns on stock:
Year 1 = 10%
Year 2 = -10%
Year 3 = 17%
Year 4 = 22%
Year 5 = 10%
Total returns = 49%
Average returns = Total returns/number of years
= 9.8% (49%/5)
Average real returns
= Average returns on the stock minus the inflation rate
= 8.3% (9.8% - 1.5%)
Average nominal risk premium = return on the stock minus the return on the T-bill
= 9.8% - 3%
= 6.8%
Pay PMI (private mortgage insurance) which is the amount the lender charges to protect their interests in case the borrower stops paying and defaults on the loan.
10,000 + 10,000 = 2,00,000 / 80 % = 25,0000 totally investment
Answer:
The supply of savings increases.
Explanation:
We know that the supply of loanable funds is dependent upon the amount of deposits in the savings account. Supply curve of loanable funds represents the direct relationship between the quantity supplied and the interest rate. It is a upward sloping curve which indicates that an increase in the interest rate will lead to increase the quantity supply of loanable funds.
There is a change in the supply of loanable funds if there is any change in the savings behavior of the customers. If the savings of the customers increases then as a result the supply of savings also increases.
A. Offering a safe product will make more people want to buy that particular product.
