Answer: e. Interest rates on long-term bonds are more volatile than rates on short-term debt securities like T-bills.
Explanation:
Long term bonds are considered to be more sensitive to interest rates as opposed to short term securities. If interest rates were to rise, the bond could lose value.
They are also more sensitive to inflation. If inflation rates rise, the value of payment reduces. It is for this reason that longer term bonds have maturity risk premiums added to them to cater for the amount of time the bond has till maturity.
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no matteehow much times i read this is still cant process this
Answer:
d) 14.93%
Explanation:
initial outlay = -$375,000
cash flow year 1 = $315,000
cash flow year 2 = -$25,000
cash flow year 3 = $110,000
cash flow year 4 = $150,000
Since there are two cash outflows, we will have two different IRRs.
We can use an excel spreadsheet and the MIRR function to solve this:
=MIRR (-375000 to 150000, 10%, 10%) = 14.93%
unless told otherwise, we should use the discount rate as both our finance and reinvestment rate.
Answer:
Based on the information supply of cards is more elastic (price sensitive) than that of roses
Explanation:
Price elasticity of supply is defined as the sensitivity of quantity supplied to changes in price.
The formula is given below
Price elasticity of supply= Change in quantity supplied ÷ Change in price
In this scenario the demand for both roses and cards increases, however the price of roses increases more.
This implies that the denominator in the formula is higher in roses resulting in smaller price elasticity of supply.
The elasticity of supply for cards is higher than that of roses, so it is more sensitive to changes in price.
Cards can be stored from year to year so the labour for maintaining a stock of cards is low with resultant low price.
On the other hand roses require care to grow. It requires watering, application of chemicals to treat infestation and so on. So suppliers tend to push the extra cost of growing roses to the buyers