Answer:
d) $18.62
Explanation:
Hi, first, let´s introduce the formula to find the price of this stock.
Where:
Do = Last Dividend
g = growth rate
r = cost of equity
We have almost everything, all we need to do is find "r". That is:
Where:
rf = risk Free rate
MRP = market risk premium.
So, we find r first as follows:
therefore, r = 9.75%. Now we are ready to find the price of the stock.
The price of this stock is $18.62
Best of luck.
"... there is excess supply of bonds... interest rate will fall."
When the interest rate is above equilibrium, Qd (Quantity demanded) will be less than Qs (Quantity supplied) of bonds, since people are less willing to purchase when price is too high, and producers are more willing to sell their bonds when price is higher (since they earn more per unit sold). This results in surplus of bonds in the market, where Qs > Qd, which leads to a downward pressure being applied on price (in this case, the interest rate) so that Qs eventually equals to Qd.
Hope this helps!
Consumer decision making is a process that has 5 steps. The first step is the consumer recognition of the need they need to satisfy. It is termed as the basic step since one cannot look for money to satisfy a need that they have not first recognized.
Answer:
Profit of $3000
Explanation:
The exchange rate of a future contract is usually fixed at the time when the contract is buy 100,000 euros at a futures contract price of $1.22.
The Value in dollars at the time is: $122,000
At the maturity spot rate of the euro is $1.25.
The value of the contract is: $125,000
The difference:
$125,000-122,000
=$3000.
Since the maturity spot rate is higher, there is a profit of $3000 from speculating with the futures contract.
The answer to your question is D
