If a consumer believes that the price of the good will be higher in the future he is more likely to purchase the good now. If the consumer expects that her income will be higher in the future the consumer may buy the good now. In other words positive expectations about future income may encourage present consumption.
Answer:
C. $0.11
Explanation:
When there is excess capacity and there are no incremental fixed costs the break even transfer price would be the marginal cost of production. This is the least transfer price the Bells can sell to Rattle without making a loss. The most likely transfer price then would be $0.11 which allows the bells to cover their costs and also make 1 cent in profits. Option A, B and D would all be making losses where as Option E and F are two steep a price and may be unprofitable for rattle.
Hope that helps.
Answer:
The portfolio's alpha is - 0.15%
Explanation:
For computing the portfolio's alpha, first, we have to compute the expected rate of return. The formula is shown below:
Expected rate of return = Risk free rate of return + Beta × (realized rate of return - free rate of return)
= 7% + 1.15 × (12% - 7%)
= 7% + 1.15 × 5%
= 7% + 5.75%
= 12.75%
Now the portfolio alpha equal to
= Expected rate of return - portfolio realized rate of return
= 12.75% - 12.6%
= - 0.15%
