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Ad libitum [116K]
3 years ago
8

the pure expectations theory holds, which of the following statements is CORRECT? a. The maturity risk premium would be zero. b.

The yield curve for Treasury securities would be flat, but the yield curve for corporate securities might be downward sloping. c. If 2-year bonds yield more than 1-year bonds, an investor with a 2-year time horizon would almost certainly end up with more money if he or she bought 2-year bonds. d. The yield curve for both Treasury and corporate bonds should be flat. e. The yield curve for Treasury securities cannot be downward sloping.
Business
1 answer:
Anastasy [175]3 years ago
7 0

Answer: The Maturity Risk Premium would be zero.

Explanation:

The Pure Expectations Theory believes that forward rates are just a representation of what people expect Future rates to be.

For this reason therefore, it believed that the Maturity Premium is Zero amongst Long Term Treasury Securities and that the difference in interest rates attached to Treasury bonds of different maturities is simply a result of what people perceive future interest rates to look like but as for Maturity Premiums, it doesn't exist in long term Treasury Securities.

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Which project type creates a competitive advantage that enables the organization to earn a greater than normal return on investm
aleksandr82 [10.1K]

Answer:

a breakthrough project

Explanation:

Having competitive advantage <em>implies</em> being in a  condition or circumstance that puts an organisation in a favorable business position.

Therefore, a Breakthrough Project would create a competitive advantage that enables the organization to earn a greater than normal return on investment than its competitors, because it is like a<em> disruptive innovation.</em>

4 0
3 years ago
A friend of Mr. Richards recently won a law suit for $30 million. They have the ability to either take the payments over 10 year
denis23 [38]

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

A friend of Mr. Richards recently won a law suit for $30 million. They can either take the payments over 10 years or settle today for cash of $25 million. Mr. Richard is optimistic that he can earn a 6% return on the money and that they should settle for $25 million today and he will invest it for them.

First, we need to find the present value of the 30 million.

To do that we need to calculate the final value.

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {3,000,000*[(1.06^10)-1]}/0.06= 39,542,385

PV= FV/(1+i)^n= 39,542,385/1.06^10= 22,080,261

B) Now we know that the present value of option B is higher. One dollar today is better than one dollar tomorrow. It is better to receive the money now to invest it.

5 0
3 years ago
In the simplified model with proportional taxation introduced at the end of chapter 5, there can be two equilibria, one with a h
Radda [10]

Answer:

answer is given below

Explanation:

Equilibria with high tax rate.

  • In the high balance tax system, taxes are already high. Make government spending and revenue sources mandatory. and Tax rates decrease.
  • The income effect leads to an increase in both consumption and leisure, but when the alternative effect is taken into account, higher costs lead to greater employment and greater consumption but leave the party on leave.
  • Tax base witnesses grow. Output increases but relaxation decreases.

Equilibria with low tax rate:

  • An increase in government spending leads to an increase in tax rates to increase income sources.
  • The increase in taxes leads to a decline in consumption and production.
  • Therefore, the amount of time spent at rest will increase.
3 0
3 years ago
Samson, Inc. reported the following information for the​ year: Service Revenue $ 40 comma 000 Operating Expenses 24 comma 000 Ne
agasfer [191]

Answer:

$2.29

Explanation:

The units cost per service is the ratio of the total operating expense to the total number of services provided during the year. Given that the Operating Expenses 24 comma 000 and the  Number of Services Provided for the Year 10 comma 500,

the unit cost per​ service

= $24,000/10,500

= $2.285714286

To the nearest cents

= $2.29

6 0
3 years ago
If a company's cost of capital increases unexpectedly, which of the following actions will help it maintain or increase its stoc
Kitty [74]

Answer:

III) Increase its gross margin

Explanation:

If the company increases its gross margin, it will have a direct impact on the company's net profit. The higher a company's net profit, the higher its value = higher stock price.

The only option that increases the value of the company is to increase its net profit, since:

  • an increase in inventory will result in a lower stock price
  • a decrease in the asset turnover ratio will result in a lower stock price
  • the issuing of stock dividends will only increase the price of stock in the short run, later the price will adjust down since the company's book value will lower
4 0
3 years ago
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