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Semenov [28]
3 years ago
11

Assume the following: The real risk-free rate, r*, is expected to remain constant at 3%. Inflation is expected to be 3% next yea

r and then to be constant at 2% a year thereafter. The maturity risk premium is zero. Given this information, which of the following statements is CORRECT? The yield curve for U.S. Treasury securities will be upward sloping.
A 5-year corporate bond must have a lower yield than a 5-year Treasury security.

A 5-year corporate bond must have a lower yield than a 7-year Treasury security.

The real risk-free rate cannot be constant if inflation is not expected to remain constant.

This problem assumed a zero maturity risk premium, but that is probably not valid in the real world.
Business
1 answer:
DaniilM [7]3 years ago
7 0

Answer:

This problem assumed a zero maturity risk premium, but that is probably not valid in the real world.

Explanation:

Consider the following definition

Maturity risk premium determines a bond’s price. Other risks include the chance that the bond issuer will fail to make its payments and the risk that you won’t be able to quickly find a buyer for the bond when you want to sell it, forcing you to lower your asking price.

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You plan to make a series of deposits in an interest-bearing account. You will deposit $1,000 today, $2,000 in 2 years, and $8,0
solniwko [45]

Answer:

$5,641

Explanation:

DEPOSIT NOW  

$1000 * FVIF 9%,8 PERIODS

= $1000 * 1.9926

= $1992.6

IN 2 YEARS

= $2000 * FVIF 9%,6 PERIODS

= $2000 * 1.6771

= $3354.20

IN 5 YEARS

= $8000 * FVIF 9%, 3 PERIODS

= $8000*1.2950

= $10360

WITHDRAWAL: IN 3 YEARS

= ($3000) * FVIF 9%, 5 PERIODS

= ($3000) * 1.5386

= ($4615.80)

IN 7 YEARS

= ($5000) * FVIF 9%, 1 PERIOD

= ($5000) * 1.0900

= ($5450)

Total value = $1992.6  + $3354.20 + $10360  - $4615.80 - $5450

Total value = $5,641

So, the total future value after eight years is $5,641

7 0
2 years ago
50 pts!!! up for grabs!!!
astraxan [27]

Answer:

thx fpr the 50 bro and can i get brainliest i need one more

Explanation:

7 0
3 years ago
If a sole proprietorship fails which of the owner's assets may be lost
bulgar [2K]
They can lose their personal assets.
4 0
3 years ago
Consider the metaphor used in the article differentiating managerial and leadership roles (average managers play checkers, great
Jobisdone [24]

Answer:

Following are the solution to this question:

Explanation:

The metaphor of gambling, chess, and rallying related only to the degree of growing complexity and significance of different roles. In typical management needs and allocates capital, so named players. A senior executive not just uses the resource and also serves as a key motivator for both the company's so-called chess-making goals. Its successful leaders, however, not just to lead to accomplishing organizational targets, and also motivate individuals to serve a better future, and people are advised to rally to the metaphor is therefore said to have been accurate and is focused on the various positions and levels performed by the organization, thus distinguishing roles.

5 0
3 years ago
Macintosh Inc. changed from LIFO to the FIFO inventory costing method on January 1, 2021. Inventory values at the end of each ye
melamori03 [73]

Answer:

the entry to report this accounting change is in the attachment.

Explanation:

By moving from LIFO to FIFO, there's is going to be an increase in the value of inventory from of 30,000. That is $380,000 - $350,000.

The answer to this question is to make a journal entry. I have done this in the attachment.

6 0
3 years ago
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