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mario62 [17]
4 years ago
7

3. The one-year interest rate over the next 10 years will be 3%, 4.5%, 6%, 7.5%, 9%, 10.5%, 13%, 14.5%, 16%, and 17.5%. Using th

e expectations theory, what will be the interest rates on a three-year bond, a six-year bond, and a nine-year bond?
Business
1 answer:
ZanzabumX [31]4 years ago
8 0

Answer:

Expectation theory predicts the short-term interest rates by taking average of current-interest rates over a period of time. The interest rates for the following securities using the expectation theory would be:

Interest rate on 3 year bond = \frac{3+4.5+6}{3}  = 4.5%

Interest rate on 6 year bond = \frac{3+4.5+6+7.5+9+10.5}{6} = 6.75%

Interest rate on 9 year bond =\frac{ 3+4.5+6+7.5+9+10.5+13+14.5+16}{9}  = 9.33%

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2. The feature of the general version of the arbitrage pricing theory (APT) that offers the greatest potential advantage over th
Simora [160]

Answer: Use of several factors instead of a single market index to explain the risk-return relationship

Explanation:

Arbitrage pricing theory (APT) is when the return on an asset is forecasted when the linear relationship which exist between the expected return of the asset and the macroeconomic variables are being considered.

Capital Asset Pricing Model (CAPM) helps in showing the relationship that take place between systematic risk and an asset expected return.

The feature of the general version of the arbitrage pricing theory (APT) that offers the greatest potential advantage over the simple CAPM is the use of several factors instead of a single market index to explain the risk-return relationship as it's more robust when compared to the CAPM.

3 0
3 years ago
Fred is giving a speech about legal decisions that were important in the U.S. civil rights movement. First, he plans to talk abo
Maru [420]

Answer: (C) Problem-solution

Explanation:

 According to the question, the Fred is using the problem solution pattern of an organization. Fred is delivering a speech on the legal decision in the united state (US) civil right movement.

The civil right movement is one of the struggle movement in the united state. It main goal is to enforce many legal and constitutional rights for the African Americans.

7 0
3 years ago
Corporation's stock has a required rate of return of 10.25%, and it sells for $57.50 per share. The dividend is expected to grow
Rudik [331]

Answer:

$6.25 (rounded off)

Explanation:

In this case we first have to find the most recent dividend and then multiply is by (1+Growth rate) in order to find year end dividend. The price of the stock currently is $57.50 and the required rate of return is 10.25% so we can assume that the most recent dividend of the stock was 10.25% of 57.5

Recent dividend = 57.50 *0.1025= 5.89

Year end dividend = Recent dividend *(1 +growth rate)

                            =5.89*(1+0.06)

                             = 6.247

6 0
3 years ago
Consider the following potential events that might have occurred to Global on December 30, 2010. Global used $20.9 million of it
Debora [2.8K]

Answer:

a. Global used $20 million of its available cash to repay $20 million of its long-term debt.

Explanation:

4 0
3 years ago
A major reason why it is difficult to lower the barriers to free trade is A. the loss of jobs without any gain of jobs from free
Thepotemich [5.8K]

Answer:

B) the uneven distribution of gains and losses from free trade.

Explanation:

One of the most important reasons why governments impose trade barriers is to protect domestic jobs (and domestic industries). We are part of a society (country), and society's most important component is people, not money. Generally the economic gains of free trade are larger than the economic losses, but the economic losses hurt the most.

Imagine if no trade barriers actually existed, how many millions of jobs would be lost in the US. Trade barriers are nothing new, the current president didn't invent them. He just incinerated them.

How does a leader tell the people that 10 or 20 million must lose their jobs and probably will not be able to find any similar jobs in the future just because the rest of society will benefit from cheaper products. The lives of 20 million households (50-80 million people) would be destroyed, while 280 million people would benefit.

The amount of harm done to the people that lose their jobs is much greater than any individual benefit.

6 0
4 years ago
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