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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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Barker Corp. has a beta of 1.10, the real risk-free rate is 2.00%, investors expect a 3.00% future inflation rate, and the marke
Stells [14]

Answer:

the required rate of return for Barker's investor is 10.17%

Explanation:

<u><em>First, We have to calcualte the CAPM </em></u>

(Capital Assets Pricing Model)

Ke= r_f + \beta (r_m-r_f)

risk free = 0.02

premium market = (market rate - risk free) 0.047

beta(non diversifiable risk) = 1.1

Ke= 0.02 + 1.1 (0.047)

Ke 0.07170

now we add the inflation premium:

0.0717 + 0.03 = 0.1017 = <em>10.17%</em>

8 0
3 years ago
which will typically decrease with large number of units produced, fixed costs, total variable costs, fixed cost per unit, varab
Nady [450]

Answer:

fixed cost per unit,

Explanation:

Fixed cost is cost that does not vary with output. It remains constant regardless of the units of output produced. An example of fixed cost is rent.

fixed cost per unit = fixed cost / output

Let us assume that rent (fixed cost) is $500. When output is 1 unit,  fixed cost per unit = $500 / 1 = $500

when output is 2 units,  fixed cost per unit = $500 / 2 = $250

when output is 10 units ,  fixed cost per unit = $500 / 10 = $50

4 0
3 years ago
A general partner is responsible for any debts of the partnership, regardless of whether he or she was directly involved in the
azamat

Answer:

True

Explanation:

A partnership is a type of business owned by two or more individuals known as partners. The partners join forces to exploits their talents and resources and profit from the business. A partnership may comprise of general and limited /silents partners.

The general partner participates in the day to day activities of the business. He or she makes business decisions on behalf of the partnership. Because a general partner is actively involved in managing the business, he has unlimited liability to its obligations. Should the partnership fail to meet its obligation, the assets of a general partner sold to settle the debts. He or she need not have been involved in creating the liability.

5 0
3 years ago
A wool​ suit, discounted by 60 % for a clearance​ sale, has a price tag of $ 620. What was the​ suit's original​ price?
never [62]

Answer:

$1,550

Explanation:

Given that

Price tag = $620

Discount percentage = 60%

By taking the information,

The computation of the suit original price equal to

= Price tag ÷ (1 - discount percentage)

= $620 ÷ (1 - 0.60)

= $620 ÷ 0.40

= $1,550

Therefore, the suit original price is $1,550 after considering the discount percentage and the price tag.

6 0
3 years ago
What does the CFO of a company do? A. Manage the financial health of the company B. Manage the technological areas of the compan
juin [17]
A Is the correct answer I think CFO stands for Chief Financial Officer. 
4 0
3 years ago
Read 2 more answers
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