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Arlecino [84]
3 years ago
13

You buy a TIPS at issue at par for $1,000. The bond has a 3% coupon. Inflation turns out to be 2%, 3%, and 4% over the next 3 ye

ars. The total annual coupon income you will receive in year 3 is _________.
a.$30
b.$33
c.$32.78
d.$30.90
Business
1 answer:
Nataly_w [17]3 years ago
3 0

Answer:

C) $32.78

Explanation:

Treasury Inflation Protected Securities (TIPS) are US treasury bonds that are indexed to inflation. That means that the coupon paid is adjusted to include the inflation rate.

coupon for year 3 = ($1,000 x 3%) x (1 + inflation rate year 1) x (1 + inflation rate year 2) x (1 + inflation rate year 3) = $30 x 1.02 x 1.03 x 1.04 = $32.78

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Think of the simple quantity theory of money in the AD-AS framework. In that framework, the AS curve is a.horizontal. b.upward-s
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In the simple quantity theory of money in the AD-AS framework, the AS curve kinked at natural real.

<h3>What is AS curve or Aggregate Supply Curve?</h3>
  • The amount of real GDP that the economy produces at various price levels is represented by the aggregate supply curve.
  • The methodology used to build the supply curve for all products and services is different from the methodology used to build the supply curve for individual goods and services.
  • It is assumed that input prices will remain constant when calculating the supply curve for a certain good.
  • The price level, however, defines the aggregate supply curve. As the price level rises, producers will be able to charge more for their goods, which will stimulate production.
  • However, a price increase will also have a secondary effect that will eventually result in an increase in input prices.

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2 years ago
Statements Answer 1. Significant financial statement accounts are materially affected, either directly through entries in the ge
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Answer:

Explanation:

1. Significant financial statement accounts are materially affected, either directly through entries in the general ledger, or indirectly through the creation of rights or obligations that may or may not be recorded in the general ledger by major class of transaction.

2. The auditors should design procedures to provide a high level of assurance that the controls related to each relevant assertion are operating effective.

3. A significant deficiency is a control deficiency that is less severe than a material weakness yet important enough to merit attentions by those responsible for oversight of the company's financial reporting.

4. To express the internal control opinion, the auditors should obtain sufficient evidence on the effectiveness of controls at the as of date.

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3 years ago
The number of entity classes involved in a relationship is known as the relationship's __________________.
ddd [48]

Answer:

Cardinality

Explanation:

In database design cardinality of relationship between two data tables shows the relationship between the rows and column of one table to other table. Cardinality commonly used are one-to-one cardinality, one-to-many cardinality and many-to-many cardinality. In which a single entry of the table related to only one and many in other table and many entries are related to many too.

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Consider the following probability distribution for stocks A and B: State Probability Return on Stock A Return on Stock B 1 0.10
Tomtit [17]

It can be deduced that the expected rates of return of stocks A and B are 13.2% and 7.7% respectively.

<h3>How to calculate the expected rates of return</h3>

E(RA) = 0.1 (10%) + 0.2 (13%) + 0.2 (12%) + 0.3 (14%) + 0.2 (15%)= 13.2%

E(RB) = 0.1 (8%) + 0.2 (7%) + 0.2 (6%) + 0.3 (9%) + 0.2 (8%)= 7.7%

Therefore, the expected rates of return of stocks A and B are 13.2% and 7.7% respectively.

The standard deviation will be calculated thus:

Var(RA) = [0.1 (10%-13.2%)² + 0.2 (13%-13.2%)² + 0.2 (12%-13.2%)² + 0.3 (14%-13.2%)² + 0.2 (15%-13.2%)2 ] 1/2

= 1.5%

Var(RB) = [0.1 (8%-7.7%)² + 0.2 (7%-7.7%)² + 0.2 (6%-7.7%)² + 0.3(9%-7.7%)² + 0.2 (8%-7.7%)² ] 1/2

= 1.1%

Therefore, the standard deviation of stocks A and B are 1.5% and 1.1% respectively.

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2 years ago
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