Answer:
The answer is: A) affects the amount of cash interest the borrower pays each year
Explanation:
The market interest rate is the rate that investors demand to earn for lending their money. It affects the interest rate of every type of loan (including the stated interest rate of bonds, car loans, credit cards, etc.) because when it increases (because investors want to earn more money), the general level of interest rate for loans also increases.
Answer:
True
Explanation:
The reason is that the straight line equation is used to illustrate the relation between the rate of return and the beta factor and is given as under:
Y = a + bX
Here
a = Rf
B = Risk premium = Rm - Rf
X = Beta Factor
So this means the security market line is the graphical presentation of capital asset pricing model and illustrates why the increase in beta factor increases the required rate of return, the reason is that the the overall required return Y of the investment will start increasing with the increase in the beta factor.
So the statement is true.
An investment vehicle known as a mutual fund pools the money of its shareholders and uses it to buy securities like stocks, bonds, money market instruments, and other assets. Professional money managers who specialize in managing mutual funds deploy the assets of the fund to produce capital gains or income for the fund's investors.
The portfolio of a mutual fund is structured and managed to meet the investment objectives stated in the prospectus. Mutual funds provide access to professionally managed portfolios of stocks, bonds, and other securities to small and individual investors. As a result, each shareholder shares in the fund's profits or losses in proportion.
Mutual funds invest in a wide range of securities, and their performance is typically measured by the change in the fund's total market capitalization.
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Answer:
implied credit spread = 1.13 %
Explanation:
given data
interest on foreign government bonds = 7.5%
current exchange rate = 28
forward exchange rate = 28.5
risk-free rate = 4.5%
solution
we get here risk free rate by the forward exchange rate that is
F = spot exchange rate × \frac{1+Rr}{1+Rs} ....................1
put here value
28.5 = 28 × \frac{1+Rr}{1+0.045}
solve it we get
Rr = 0.0637
Rr = 6.37%
so
implied credit spread = interest on foreign government bonds - risk free rate
implied credit spread = 7.5% - 6.37%
implied credit spread = 1.13 %
Answer:
So they know what do when they fight back or attack
