Answer:
17%
Explanation:
If a company issued a short-term note payable to a bank with a stated 12 percent rate of interest and in addition the bank charged a .5% loan origination fee and remitted the balance to the company. The effective interest rate paid by the company in this transaction would be 17%
The effective annual interest rate is <u>the interest rate that is actually earned or paid on an investment, loan</u> or other financial product.
Hence, since the company is both paying the initial 5% and the later 12%, effectively the company is paying 17% on the note payable.
Through the expectations hypothesis and the liquidity preference theory of the term structure of interest rates, liquidity must be zero for the forward rate to be equal to the expectations of future short rates.
<h3 /><h3>What is expectation theory?</h3>
Corresponds to a forecast of short-term interest rates by analyzing them against current long-term interest rates.
Therefore, it is a theory used to assist in better understanding and forecasting short-term securities trading in the future.
Find out more about expectation theory here:
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The answer is 40%, in which the following are given: the Variable expense is equal to 20 dollars per unit and Sales is equal to 50 dollars per unit. Use the formula Variable Expense Ratio = Variable Expenses / Sales to get the answer.
Variable Expense Ratio = Variable Expenses / Sales
Variable Expense Ratio = 20 dollars per unit / 50 dollars per unit
Variable Expense Ratio = 40 %
The variable expense ratio is an expression of variable production costs of the company as a percentage of sales, calculated as variable expense divided by total sales. It compares a cost that alters with levels of production to the number of revenues generated by production.
<span>Reserves fall by $1,000, checkable deposits fall by $10,000, and the monetary base remains uncharged.</span>
