Those who provide financial capital must make two major choices: how much money to set aside and how to allocate it among various financial investments.
What kinds of factors will shift the demand and supply of financial capital?
People must consider their future needs to determine how much savings they should set aside for anticipated or unforeseen circumstances. Savings will move their money to Investment B if Investment A becomes riskier or offers a lower return, which will cause the supply curve of financial capital for Investment A to move back to the left while moving Investment B's supply curve to the right. Those that ask for financial resources do so because they intend to repay it in the future. People might, for instance, take out a loan to buy a house, a car, or another type of long-term possession. To create a factory or finance a project that won't pay off for five, ten, or even more years of research and development, a corporation may look for financial investment.
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The difference in income between Cameron and Mateo is <u>$500,000</u>.
<u>Explanation</u>:
Cameron decided to start his career directly out of the high school with no further training. He was able to make an average of $30,000 in his career.
Mateo was a best friend of Cameron. He started his career after completing his college degree. He was able to make an average $55,000 for a year.
Both of them had huge difference in their salary. After 20 years, the difference between the income of Cameron and Mateo will be $500,000.
Difference in income after 20 years= (55000-30000)*20
= (25000)*20
= 500,000
Therefore, the difference in income between Cameron and Mateo is <u>$500,000</u>.
Answer:
inflation rate= 0.06= 6%
Explanation:
Giving the following information:
Interest rate= 12%
Real rate of return= 6%
The inflation rate is counterproductive to the interest rate.<u> The inflation rate reduces the purchasing price, therefore it decreases the interest rate effect on nominal money.</u>
Real interest rate= interest rate - inflation rate
0.06 = 0.12 - inflation rate
inflation rate= 0.12 - 0.06
inflation rate= 0.06= 6%