Answer:
If the money supply is MS2 and the value of money is 5, then the quantity of money
a. demanded is greater than the quantity supplied; the price level will rise.
Explanation:
If the money supplied is greater than the quantity demanded; the price level will fall. The quantity theory of money, popularized by Irving Fisher but developed by John Maynard Keynes, states that the value of money is influenced by the forces of demand and supply. This theory implies that money supply and price level proportionally influence each other.
Answer:
Required return is 8.75%
Explanation:
Given,
FV (Face Value) is $1,000
PV (present Value) is computed as:
PV = FV × Price
= $1,000 × 101.4%
= $1,014
Nper (Number of years) is 8 years
PMT (Monthly payment) is computed as:
PMT = FV × Coupon rate
= $1,000 × 9%
= $90
r (Required return) is computed by using the excel formula:
=Rate(nper, pmt, pv, fv, type)
= Rate (8,90,-1014,1000,0)
= 8.75%
Answer:
Price of bond= $1,922.92
Explanation:
<em>The value of the bond is the present value(PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV). </em>
Value of Bond = PV of interest + PV of RV
Semi-annual interest = 4.93% × 2,000 × 1/2 =49.3
Semi-annual yield = 5.29%/2= 2.65%
PV of interest payment
PV = A (1- (1+r)^(-n))/r
A- 49.3, r-0.02645, n- 16×2
= 49.3× (1-(1.02645)^(-10)/0.02645)
= 1,055.521
PV of redemption Value
<em>PV = F × (1+r)^(-n)
</em>
F-2000, r-0.02645, n- 16
×2
PV = 2,000 × 1.02645^(-16×2)
PV = 867.402
Price of Bond
1055.52 + 867.40 =1,922.92
= $1,922.92
Answer:
First step in decision- making process is to identify problem. The first step in making the right decision is recognizing the problem or opportunity and deciding to address it. Determine why this decision will make a difference to your customers or fellow employees.
Explanation:
Salutary products are products that have low immediate appeal but may benefit consumers in the long run.
<h3>What is Long Run?</h3>
There is a time frame known as the long run during which all cost and production elements are erratic. In the long run, businesses modify every expense, but in the short term, they can only affect prices by changing their production levels. A company may also anticipate competition in the long run, even though it may currently have a monopoly in the near term.
A long run is a span of time during which a manufacturer or producer can make production-related decisions with some latitude. Depending on the predicted profits, businesses can either increase or decrease their production capacity, or enter or leave a certain industry.
In order to achieve an equilibrium between supply and demand, firms that look at the long term understand that they cannot change output levels.
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