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bulgar [2K]
3 years ago
10

5.The real risk-free rate of interest is 2%. Inflation is expected to be 3.5% the next 2 years and 6% during the next 3 years af

ter that. Assume that the maturity risk premium is zero. What is the yield on 3-year Treasury securities
Business
1 answer:
Nostrana [21]3 years ago
8 0

Answer:

17.50%

Explanation:

The computation of the yield on 3 year treasury securities is shown below:

The Yield on 3 year is

= Risk free rate of return   +  Inflation premium + Market risk premium

= 2% + (3.5% + 6% + 6%) ÷ 3 years + 0

= 2% + 15.5% + 0

= 17.50%

Hence, the yield on 3 years is 17.50% by applying the above formulas by considering the given information

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Brainlist plz!!!!

8 0
3 years ago
Read 2 more answers
Gasoline and bicycles are substitutes in consumption. Suppose we increase the federal gasoline tax to $1 per gallon.
marin [14]

If the federal gasoline tax increases to $1 per gallon, the gasoline price rises, demand for bicycles shifts rightward.

Option B

<u>Explanation:</u>

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Demand curve a graphical representation of changes in the product or service demanded along with the changes in the cost or price of the service or product. Increase in the demand for a product, is generally represented by the rightward shift in the demand curve.

8 0
3 years ago
2) Economic Growth: Use the PPF from above to illustrate the effects of saving and investment upon national GDP. Use a PPF to sh
Inessa [10]

Answer and Explanation:

Economic Growth can be defined as an increment in production capacity of an economy using all its available resources. The PPF illustrates the largest possible quantity of goods and services a nation can produce base on its available resources. An outward shift in the economy’s production possibility frontier (PPF) depicts  a raise in productive capacity of an economy.  An outward shift implies that an economy has capacity to  increase its production outputs. This can be as a result of   the economy employing new technology, allowing specialization, increasing its labour force, using new production approaches etc. Likewise, an inward shifting PPF implies an economy has witness a loss or exhaustion of some of its scarce resources and it will culminate into reduction in an economy’s productive potential.

Effects of saving and investment upon national GDP

level of savings direct related to the level of investment, investment feeds on available finance from saving. If more people save, the banks will be able  to lend more to firms to support their investments.

low savings and investment implies a PPF inward shift. low savings  in economy implies that the economy is opting for short-term consumption over long-term investment, and this will lead to future undue pressure on available infrastructures ad resources.

spending  on consumer goods vs capital goods effect on the economy

In the short run, the economy must prefer using available resources to produce capital rather than consumer goods. Standards of living will be affected, as private consumption will have access to fewer resources. However, in the longer run, the raised production of capital goods will boost  the production of more consumer goods ad therefore standards of living will experience more increase than they would have witness if the economy had spent most of its income on consumer goods.

6 0
3 years ago
___ refers to factors that prevent new firms from successfully competing in the industry
antiseptic1488 [7]

Answer:

barriers to entry

Explanation:

3 0
2 years ago
An organization that has direct two-way lines of responsibility, authority, and communication running from the top to the bottom
loris [4]

<u>line</u>

Explanation:

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