According to Okun's law, when cyclical unemployment increases by one percentage point, the recessionary gap ______ by ______ per
1 answer:
Answer:
The answer is "widens and two"
Explanation:
Okun 's law relates to the relationship between some of the unemployment rate and the United States economy and also its gross national product. This also tells that GNP increases by 3% unless joblessness starts dropping by 1%.
The maths formula of this law can be defined as follows:
The above formula proves that Whenever a 1% point of cyclical increasing unemployment, its derivative instrument tends to increase by 2%
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Answer:
cost of equity = 13%
Explanation:
With the info given, we will use cost of equity formula from Dividend Growth Model. THis is given by:
Where D_1 is the next year dividend or D_1 = D_0(1+g)
P_0 is current stock price
g is the growth rate
Since D_0 (dividend this year) is 4.20 and g = 6.4% or 0.064, we can calculate D_1:
Current share price is 68, so we can now calculate cost of equity:
Hence,
cost of equity = 13%