Answer: c. negative relation between the real interest rate and saving.
Explanation: Savings belong to what an economy saves from its income, which in turn represents national savings. We also have the investment and the net capital flow. The balance is reached when the amount of savings equals investment and net capital flows or demand for loanable flows.
Therefore, we can say that the demand is negative when interest rates rise, since this retracts the economy and decreases the savings and thus the money available to lend.
Answer:The cost of capital that will make both investments equal is 17.045%
Explanation:
Investment A
$1.5 million will be received in perpetuity we can there use perpetuity formula to Value investment A.
Value of Investment A = 1500 000/r
Investment B
$1.2 Million will be received in Investment B with a growth rate of 3% will then use Gordon's growth rate model to value investment B.
Value of investment B = (1200 000 x (1+0.03))/(r - 0.03)
Value of investment B = 1236000/(r - 0.03)
1500 000/r = 1236000/(r - 0.03)
1236000(r) = 1500000(r - 0.03)
(r - 0.03) = 1236000( r)/1500000
r - 0.03 = 0.824r
r - 0.824r = 0.03 = 0.176r = 0.03
r = 0.03/0.176 = 0.170454545
R = 17.045%
The cost of capital that will make both investments to be equal is 17.045%
She needs 6.2 more pounds to reach 20.8, which is how much she needs for 16 pints of applesauce.
Answer: Option C
Explanation: Primary market refers to the market in which the securities are sold to the general public for the first time by the companies. In simple words, the initial public offering process takes place in such markets. The securities could be of any type whether debt, equity or preference.
The market in which existing securities are bough and sold is called secondary market. And the commission is paid in both secondary and primary market.
Hence the correct option is C.
