All categories

3 years ago

Which economic indicators most strongly suggest that an economy is

1 answer:

4 0

I’m pretty confident it is C. It is my understanding that GDP and unemployment rates have an inverse relationship. When the economy is doing well you would expect the GDP to increase and the unemployment rate to decrease.

You might be interested in

The tendency to search for information consistent with our preconceptions is called: A. functional fixedness B. the representati

REY [17]

Answer:

D, confirmation bias

Explanation:

Confirmation bias is a form of cognitive bias that is defined as the tendency to interpret ,search, recall an information that confirms one's previous personal belief.

For example, if you suspect that a friend of yours is a thief after some things went missing a few times after he left you place and then someone else tells you he is also suspecting that same friend of being a thief, your confidence bias immediately connects both situations and then you believe your friend is a thief.

I hope this helps.

8 0

3 years ago

Analytical procedures are audit methods of evaluating financial statement accounts by studying and comparing relationships among

puteri [66]

Answer:

identify conditions to be explored all the more altogether

Explanation:

Analytical procedures are used in reviews and are generally an important part in comparing data. Analytical procedures include correlations of various monetary and operational data, to check whether authentic connections are proceeding ahead into the period under audit. It also helps to understand the client's business operations in detail, and it also assist in identifying the changes required.

7 0

3 years ago

A bank has written a call option on one stock and a put option on another stock. For the first option the stock price is 50, the

iris [78.8K]

Answer:

10-Day 99% VaR = 3.61

Explanation:

Data Given:

For First Option:

Stock Price = 50

Strike Price = 51

Volatility = 28% per annum

Time to maturity = 9 months

For Second Option:

Stock Price = 20

Strike Price = 19

Volatility = 25% per annum

Time to maturity = 12 months or 1 year

Risk Free Rate = 6% per annum

Correlation = 0.4

Find 10-day 99% VaR.

Solution:

First of all we need to refer the DerivaGem Model to dig out the change in price equation for both the options.

So, according to DerivaGem Model, We have following data:

For First Option:

Value = -5.413

Delta Value = -0.589

For Second Option:

Value = -1.014

Delta = -0.284

Change in Price = (Delta value of First Option x Stock Price)Y1 + (Delta value of the second option x Stock Price)Y2

Change in Price = (-0.589 x 50)Y1 + (-0.284 x 20)Y2

So, We will get the Change in Price Linear Equation for both the options.

Change in Price = -29.45Y1 -5.68Y2

Now, we have to calculate the Daily Volatility Percentage.

Formula:

Daily Volatility Percentage = Volatility/ Square root of number of days active in annum

Number of Days Active = 252

Volatility for First Option = 28%

Volatility for Second Option = 25%

Daily Volatility Percentage for First Option = 28%/ $\sqrt{252}$

Daily Volatility Percentage for First Option = 0.0176

Similarly,

Daily Volatility Percentage for Second Option = 25%/ $\sqrt{252}$

Daily Volatility Percentage for Second Option = 0.0157

Now, utilizing the above calculated data, we can find the one-day variance of change in price.

1-Day Variance = $(29.45^{2} *0.0176^{2}) + (5.68^{2} * 0.0157^{2}) - (2 * 29.45 * 0.0176 * 5.68 * 0.0157 * 0.4)$

Solving the above equation:

We get:

1-Day Variance = 0.2396

Now, we have to find the standard deviation of 1-Day Variance:

SD of 1-Day Variance = $\sqrt{0.2396}$

SD of 1-Day Variance = 0.4895

So,

Now, in order to find the value of one day 99% VaR from the table, we have all the prerequisites.

So,

Value of One day 99% VaR from table = 2.33

But we need 10-Day 99% VaR.

So, number of days = 10

Hence,

10-Day 99% VaR = $0.4895 * 2.33 * \sqrt{10}$

10-Day 99% VaR = 3.61

8 0

2 years ago

Hart enterprises recently paid a dividend, d0, of $1.25. it expects to have nonconstant growth of 20% for 2 years followed by a

zepelin [54]

Answer:

Explanation:

Terminal or horizon date is a point in time where a company's dividend experiences a constant growth rate.

In this case, it is mentioned that non-constant growth rate of 20% will happen for first two years and thereafter, a constant rate of 5%; this means that

D1= 1.25(1.20) =1.5

D2 = 1.5 (1.20)= 1.8

Then starting at D3, there's a constant growth rate = 5% so,

D3 = 1.8 (1.05)= 1.89

D4 = 1.89(1.05)= 1.9845

D5 = 1.9845 (1.05) = 2.0837

.....and so on

Therefore, the horizon date would be at the end of the second year i.e. End of Year 2.

8 0

3 years ago

Shen manages a grocery store in a country experiencing a high rate of inflation. He is paid in cash twice per month. On payday,

IRINA_888 [86]

Answer:

The correct answer is option b.

Explanation:

Shen is working in a country where the inflation rate is high.

He gets a salary every two weeks.

After receiving his salary he immediately goes out and buys all the goods he is going to need over the next two weeks.

He converts the remaining salary in a more stable currency.

He does this in order to prevent his salary from losing purchasing power.

This effort that he is making to prevent his real income from losing value is called the shoe-leather cost of inflation.

The shoe-leather cost can be defined as the cost of time and effort made to prevent the cash holdings from losing their value.

3 0

3 years ago