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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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2 years ago
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Ultimately, multinational corporations that pursue an international strategy, their headquarters keep tight control over marketi
emmainna [20.7K]

The answer is true. A multinational corporation is one that exports internationally or offers services to customers or clients in other company. The initial step in most organizations' global development plans is typically an international strategy, which involves exporting or importing goods and services while marketing maintaining a headquarters or offices in their home country.

There is no one method that works for all business ventures that involve global expansion. Multinational corporations may decide to invest more in their target markets as they expand and scale.  Depending on your objectives and business style, expanding your company internationally by marketing takes on numerous forms.

To learn more about multinational corporation , click here.

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5 0
1 year ago
Imagine you are a consultant who has been asked to summarize the strengths and weaknesses of Agoria, a nation with a pure market
Marta_Voda [28]

Answer:

Two weaknesses as consultant can be identify: The economy experiences economic fluctuations, and people with no resources to sell could starve

Explanation:

In a pure market economy, the allocation of resources is based on purely the dynamics between supply and demand. If our economy is closed (there is no imports nor exports) and there is not different actors (such as government) and all trade goods are perfect (they are not public or semi-public goods), then the market will efficiently allocate all the resources. Nevertheless, this is not the case, and with an open economy and the existence of imperfections, any external impact will cause economic fluctuations, and those workers with no demandable offer will not be hired, and potentially will be out of the market.

3 0
3 years ago
Different organizations face different constraints and rules. _____ have more ways to accumulate capital (such as issuing stocks
Pani-rosa [81]

Answer:

Different organizations face different constraints and rules. Not-for-profit organizations have more ways to accumulate capital (such as issuing stocks and bonds) and benefit from economies of scale. But small firms do not have to pay certain kinds of taxes.

Explanation:

Non profit organization such as NGOs have more ways to accumulate capital through international support as a result of the nature of task they are carrying out. International organization that supports NGOs are United Nation, UNICEF, WHO, IMF and world bank among others.

while small firms does not pay certain kind of taxes as a result of the nature of type of business they are into, this limits or reduces their tax payments

6 0
3 years ago
During its 1st month of business, Noodlecake's cash increased by receiving $5,000 from issuing common stock to its owners, borro
Anestetic [448]

Answer:

Noodlecake

On its statement of cash flows, Cash Provided by Operating Activities equals $__1,000____ Cash from Investing Activities equals $__(3,000)______ Cash from Financing Activities equals $_7,000______  and the Change in Cash equals $_5,000______ Be sure to use parentheses around the amount if it is a cash outflow, e.g. $(1,000)

Explanation:

a) Data and Calculations:

Financing activities:

Common stock $5,000

Bank loan            2,000

Net cash           $7,000

Operating activities:

Cash from customer $3,000

Cash to employees   (2,000)

Net cash                    $1,000

Investing activities:

Equipment     ($3,000)

Net cash from cash flows = $5,000

The net cash from cash flows or the change in cash flows is the summation of the changes in the operating, investing, and financing activities of Noodlecake during the period under review.  It shows by how much the cash has increased or decreased when compared to the beginning balance, which can be zero as in this case.

3 0
3 years ago
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