Which strategy are you using when you only read the title section headings and captions?

Assuming the expectations theory is the correct theory of the term structure, calculate the interest rates in the term structure

Trava [24]

Answer:

The plot of the yields is attached.

Explanation:

i) 6%, 7%, 8%, 7%, 6%

Interest rate on 1 year maturity = 6%/1 = 6%

Interest rate on2 year maturity = (6%+7%)/2 = 6.5%

Interest rate on 3 year maturity = (6%+7%+8%)/3 = 7%

Interest rate on 4 year maturity = (6% + 7% + 8% + 7%)/4 = 7%

Interest rate on 5 year maturity = (6% + 7% + 8% + 7% + 6%)/7 = 6.8%

ii)6%, 5%, 4%, 5%, 6%

Interest rate on 1 year maturity = 6%/1 = 6%

Interest rate on 2 year maturity = (6% + 5%)/2 = 5.5%

Interest rate on 3 year maturity = (6% + 5% + 4%)/3 = 5%

Interest rate on 4 year maturity = (6% + 5% + 4% + 5%)/4 = 5%

Interest rate on 5 year maturity = (6% + 5% + 4% + 5% + 6%)/5 = 5.2%

3 0

3 years ago

Suppose one economist believes the target rate of unemployment is 4.5 percent while another believes it is 5.5 percent. Using Ok

Arlecino [84]

Answer:

$200 billion

Explanation:

Okun's law (or rule of thumb) states that for every 1% point drop in unemployment, the total output of the economy will increase by two percent.

In this case, since unemployment varies by 1% (= 5.5% - 4.5%), that would mean that the potential GDP differs in $200 billion (= $10 trillion x 2%) depending on which economist's unemployment estimation we use.

6 0

3 years ago

What would you do if u didnt have an education and u cant find a job?

hodyreva [135]

Find a hobby & use the best set of skills that i have & start to make my own money. Just because a person doesn't attend school or work does not mean there less, with the skill set that you can teach your self & develop on your own you can make you own money & if family & friends help you can have a business up in no time with the right tools & help you can go far.<span />

5 0

2 years ago

Rayya Co. purchases a machine for $184,800 on January 1, 2019. Straight-line depreciation is taken each year for four years assu

gizmo_the_mogwai [7]

Answer:

Refer explanation

Explanation:

A. Straight-line depreciation is whereby the same amount is depreciated every year throughout the life of the asset. It is calculated as:

(Cost of asset - Salvage Value) / Estimated total number of life years of asset.

The depreciation per year for the machine would be: ($184800 - 0) / 8

= $23,100

Depreciation for partial year’s depreciation as at 01 July 2023 = $23100 / 2 = $11,550

Debit : Depreciation account : $11550

Credit : Accumulated depreciation account : $11550

B. In order to account for sale, it should be identified whether it is a profit on sale or loss on sale. This is calculated by comparing the net book value of the asset at the time of sale, and it’s sale price. If the sale price is higher than the NBV, it is a profit on sale. If the sale price is lower than the NBV, it is a loss on sale. Net book value is calculated as cost of asset - accumulated depreciation.

If the asset was purchased on January 01 2019 and sold on July 01 2023, it was used for 4.5 years. Hence, the accumulated depreciation of the asset is $23100 x 4.5 = $103950.

NBV = $184800 - $103950 = $80,850

(B1) Machine is sold for $92,400

Profit on sale : $92400 - $80850 = $11550

Debit : Cash : $92400

Debit : Accumulated depreciation : $103950

Credit : Profit on sale of asset : $11550

Credit : Machinery Account : $184800

(B2) Machine is sold for $77616

Loss on sale : $77616 - $80850 = $3234

Debit : Cash : $77616

Debit : Loss on sale of asset : $3234

Debit : Accumulated depreciation :$103950

Credit : Machinery Account : $184800

6 0

3 years ago

This year, International Accountants, Inc. implemented a new benefits system that gives employees the flexibility to choose amon

Ymorist [56]

Answer:

The correct answer is b) cafeteria-style benefits plan.

Explanation:

A cafeteria plan is a type of employee benefit plan offered in the United States in accordance with Section 125 of the Internal Revenue Code. Its name comes from the first plans that allowed employees to choose between different types of benefits, similar to a client's ability to choose from items available in a cafeteria. Qualified cafeteria plans are excluded from gross income.

3 0

3 years ago